1993)"

j^y-N/ rr-s-y . A <V /s/ i. /

The
NORTH CAROLINA

IN THIS ISSUE

EXECUTIVE ORDER

PROPOSED RULES
Agriculture

Cosmetic Art Examiners
Electrolysis Examiners
Human Resources
Insurance
Nursing, Board of

LIST OF RULES CODIFIED

RRC OBJECTIONS

RULES INVALIDATED BY JUDICIAL DECISION

RECEIVED
CONTESTED CASE DECISIONS

FEB 18 1993
ISSUE DATE: February 15, 1993

LAW LIBRARY
Volume 7 • Issue 22 • Pages 2485 - 2546

INFORMATION ABOUT THE NORTH CAROLINA REGISTER AND ADMINISTRATIVE CODE

NORTH CAROLINA REGISTER

TEMPORARY RULES

The North Carolina Register is published twice a month and
contains information relating to agency, executive, legislative and
judicial actions required by or affecting Chapter 150B of the
General Statutes. All proposed administrative rules and notices of
public hearings filed under G.S. 150B-21.2 must be published in
the Register. The Register will typically comprise approximately
fifty pages per issue of legal text.

State law requires that a copy of each issue be provided free of
charge to each county in the state and to various state officials and
institutions.

The North Carolina Register is available by yearly subscription
at a cost of one hundred and five dollars (S105.00) for 24 issues.
Individual issues may be purchased for eight dollars (S8.00).

Requests for subscription to the North Carolina Register should
be directed to the Office of Administrative Hearings,
P. 0. Drawer 27447, Raleigh, N. C. 27611-7447.

Under certain emergency conditions, agencies may issue
temporary rules. Within 24 hours of submission to OAH, the
Codifier of Rules must review the agency's written statement of
findings of need for the temporary rule pursuant to the provisions in
G.S. 150B-21.1. If the Codifier determines that the findings meet
the criteria in G.S. 150B-21.1, the rule is entered into the NCAC. If
the Codifier determines that the findings do not meet the criteria,
the rule is returned to the agency. The agency may supplement its
findings and resubmit the temporary rule for an additional review
or the agency may respond that it will remain with its initial
position. The Codifier, thereafter, will enter the rule into the
NCAC. A temporary rule becomes effective either when the
Codifier of Rules enters the rule in the Code or on the sixth
business day after the agency resubmits the rule without change.
The temporary rule is in effect for the period specified in the rule or
180 days, whichever is less. An agency adopting a temporary rule
must begin rule-making procedures on the permanent rule at the
same time the temporary rule is filed with the Codifier.

ADOPTION AMENDMENT, AND REPEAL OF
RULES

NORTH CAROLINA ADMINISTRATIVE CODE

The following is a generalized statement of the procedures to be
followed for an agency to adopt, amend, or repeal a rule. For the
specific statutory authority, please consult Article 2A of Chapter
150B of the General Statutes.

Any agency intending to adopt, amend, or repeal a rule must
first publish notice of the proposed action in the North Carolina
Register. The notice must include the time and place of the public
hearing (or instructions on how a member of the public may request
a hearing); a statement of procedure for public comments: the text
of the proposed rule or the statement of subject matter; the reason
for the proposed action; a reference to the statutory authority for the
action and the proposed effective date.

Unless a specific statute provides otherwise, at least 15 days
must elapse following publication of the notice in the North
Carolina Register before the agency may conduct the public
hearing and at least 30 days must elapse before the agency can take
action on the proposed rule. An agency may not adopt a rule that
differs substantially from the proposed form published as part of
the public notice, until the adopted version has been published in
the North Carolina Register for an additional 30 day comment
period.

When final action is taken, the promulgating agency must file
the rule with the Rules Review Commission (RRC). After approval
by RRC. the adopted rule is filed with the Office of Administrative
Hearings (OAH).

A rule or amended rule generally becomes effective 5 business
days after the rule is filed with the Office of Administrative
Hearings for publication in the North Carolina Administrative Code
(NCAC).

Proposed action on rules may be withdrawn by the promulgating
agency at any time before final action is taken by the agency or
before filing with OAH for publication in the NCAC.

The North Carolina Administrative Code (NCAC) is a
compilation and index of the administrative rules of 25 state
agencies and 38 occupational licensing boards. The NCAC
comprises approximately 15,000 letter size, single spaced pages of
material of which approximately 35% of is changed annually.
Compilation and publication of the NCAC is mandated by G.S.
150B-21.18.

The Code is divided into Titles and Chapters. Each state agency
is assigned a separate title which is further broken down by
chapters. Title 21 is designated for occupational licensing boards.

The NCAC is available in two formats.

(1) Single pages may be obtained at a minimum cost of
two dollars and 50 cents (S2.50) for 10 pages or less,
plus fifteen cents (S0.15) per each additional page.

(2) The full publication consists of 53 volumes, totaling in
excess of 15,000 pages. It is supplemented monthly
with replacement pages. A one year subscription to the
full publication including supplements can be
purchased for seven hundred and fifty dollars
(S750.00). Individual volumes may also be purchased
with supplement service. Renewal subscriptions for
supplements to the initial publication are available.

Requests for pages of rules or volumes of the NCAC should be
directed to the Office of Administrative Hearings.

CITATION TO THE NORTH CAROLINA
REGISTER

The North Carolina Register is cited by volume, issue, page
number and date. 1:1 NCR 101-201, April 1, 1986 refers to
Volume 1. Issue 1, pages 101 through 201 of the North Carolina
Register issued on April 1, 1986.

FOR INFORMATION

CONTACT

Office

Administrativ

e Hearings,

ATTN: Ru

Division,

P.O.

Drawer 27447,

Raleigh, North Carolina

27611-7447,

(919)

733-2678.

NORTH
CAROLINA
REGISTER

Office of Administrative Hearings

P. O. Drawer 27447

Raleigh, North Carolina 27611-7447

(919) 733-2678

Julian Mann III,

Director
James R. Scarcella Sr.,

Deputy Director
Molly Masich,

Director of APA Services

ISSUE CONTENTS

I. EXECUTIVE ORDER

Executive Order 1 2485

II. PROPOSED RULES
Agriculture

Markets Division 2495

Plant Industry 2490

Standards Division 2490

Human Resources

Departmental Rules 2496

Insurance

Actuarial Services Division .... 2498

Licensing Boards

Cosmetic Art Examiners 2500

Electrolysis Examiners 2502

Nursing, Board of 2506

III. LIST OF RULES CODIFIED .2508

IV. RRC OBJECTIONS 2512

V. RULES INVALIDATED BY

JUDICIAL DECISION 2516

VI. CONTESTED CASE DECISIONS

Index to ALI Decisions 2517

Text of Selected Decisions

92 EHR 0550 2520

92 EHR 0727 2525

92 OSP 0745 2531

92 INS 0747 2537

VII. CUMULATIVE INDEX 2544

Staff:

Ruby Creech,

Publications Coordinator
Teresa Kilpatrick,

Editorial Assistant
Jean Shirley,

Editorial Assistant

NORTH CAROLINA REGISTER

Publication Schedule
(August 1992 - December 1993)

Last Day

Earliest

for Elec-

Date for

Last Day

' Earliest

Issue

Last Day

tronic

Public

Adoption

to Submit

Effective

Date

for Filing

Filing

Hearing

by Agency

to RRC

Date

:■< 5JC 3-C 5Jt jjt J-4 I-C

08/03/92

07/13/92

07/20/92

08/18/92

09/02/92

ak ^< ^<ak :k ak >k

09/20/92

>k sk sk sk >k Sc >t

11/02/92

08/14/92

07/24/92

07/31/92

08/29/92

09/13/92

09/20/92

11/02/92

09/01/92

08/11/92

08/18/92

09/16/92

10/01/92

10/20/92

12/01/92

09/15/92

08/25/92

09/01/92

09/30/92

10/15/92

10/20/92

12/01/92

10/01/92

09/10/92

09/17/92

10/16/92

10/31/92

11/20/92

01/04/93

10/15/92

09/24/92

10/01/92

10/30/92

11 14 ST

11/20/92

01/04/93

11/02/92

10/12/92

10/19/92

11/17/92

12/02/92

12/20/92

02/01/93

11/16/92

10/23/92

10/30/92

12/01/92

12 16 92

12/20/92

02/01/93

12/01/92

11/06/92

11/13/92

12/16/92

12/31/92

01/20/93

03/01/93

12/15/92

11/24/92

12/01 92

12/30/92

01/14/93

01/20/93

03/01/93

01/04/93

12/09/92

12/16/92

01/19/93

02/03/93

02/20/93

04/01/93

01/15/93

12/22/92

12/31/92

01/30/93

02/14/93

02/20/93

04/01/93

02/01/93

01/08/93

01/15/93

02/16/93

03/03/93

03/20/93

05/03/93

02/15/93

01/25/93

02/01/93

03/02/93

03/17/93

03/20/93

05/03/93

03/01/93

02/08/93

02/15/93

03/16/93

03/31/93

04/20/93

06/01/93

03/15/93

02/22/93

03/01/93

03/30/93

04/14/93

04/20/93

06/01/93

04/01/93

03/11/93

03/18/93

04/16/93

05/01/93

05/20/93

07/01/93

04/15/93

03/24/93

03/31/93

04/30/93

05/15/93

05/20/93

07/01/93

05/03/93

04/12/93

04/19/93

05/18/93

06/02/93

06/20/93

08/02/93

05/14/93

04/23/93

04/30/93

05/29/93

06/13/93

06/20/93

08/02/93

06/01/93

05/10/93

05/17/93

06/16/93

07/01/93

07/20/93

09/01/93

06/15/93

05/24/93

06/01/93

06/30/93

07/15/93

07/20/93

09/01/03

07/01/93

06/10/93

06/17/93

07/16/93

07/31/93

08/20/93

10/01/93

07/15/93

06/23/93

06/30/93

07/30/93

08/14/93

08/20/93

10/01/93

08/02/93

07/12/93

07/19/93

08/17/93

09/01/93

09/20/93

11/01/93

08/16/93

07/26/93

08/02/93

08/31/93

09/15/93

09/20/93

11/01/93

09/01/93

08/11/93

08/18/93

09/16/93

10/01/93

10/20/93

12/01 93

09/15/93

08/24/93

08/31/93

09/30/93

10 15 93

10/20/93

12.01 93

10/01/93

09/10/93

09/17/93

10/16/93

10/31/93

11/20/93

01/04/94

10/15/93

09/24/93

10/01/93

10 30 93

11/14/93

11/20/93

01/04/94

11/01/93

10/11/93

10/18/93

11/16/93

12/01/93

12/20/93

02/01/94

11/15/93

10/22/93

10/29/93

1 1 U) 93

12/15/93

12/20/93

02/01/94

12/01/93

11/05/93

11/15/93

12/16/93

12 31 93

01/20/94

03/01/94

12/15/93

11/24/93

12/01/93

12/30/93

01/14/94

01/20/94

03/01/94

* Tlie "Earliest Effective Date " is computed assuming that the agency follows the
publication schedule above, that the Rules Review Commission approves the rule at
the next calendar month meeting after submission, and that RRC delivers the rule to
the Codifier of Rules five (5) business days before the 1st business day of the next
calendar month.

EXECUTIVE ORDER

EXECUTIVE ORDER NUMBER 1
NORTH CAROLINA BOARD OF ETHICS

WHEREAS, public office in North Carolina must
be regarded as public trust; and

WHEREAS, the people of North Carolina have
a fundamental right to the assurance that officers
of their government will not use their public
position for personal gain; and

WHEREAS, this Administration is committed to
restore and maintain the confidence of North
Carolina citizens in their government; and

WHEREAS, there is a need in North Carolina
for the creation of an institutionalized procedure
designed to prevent the occurrence of conflicts of
interest in government and to deal with them when
they do occur; and

WHEREAS, this Administration acknowledges
that the vast majority of state government employ-
ees are honest and hard working in their public
and private lives;

NOW, THEREFORE, it is hereby ordered:

Section 1 . Rescission of Former Executive

Order.

Executive Order Number 1, dated January 31,
1985, and all subsequent amendments thereto are
hereby rescinded. All records, including State-
ments of Economic Interest, of the North Carolina
Board of Ethics created pursuant to said Executive
Order, are transferred to the North Carolina Board
of Ethics herein.

North Carolina Board of Ethics.

Section 2.

There is hereby established the North Carolina
Board of Ethics ("Board") consisting of seven
persons to be appointed by the Governor to serve
at his pleasure. The Governor shall, from time to
time, designate one of the members as Chair. The
members shall receive no compensation, but shall
receive reimbursement for any necessary expenses
incurred in connection with the performance of
their duties pursuant to North Carolina law. The
Board shall not be considered a public office for
the purpose of the prohibition against dual office
holding.

Section 3. Persons Subject to Order.

The following persons are subject to this order
and to the jurisdiction of the Board:

(a) All employees in the Office of the
Governor.

(b) The heads of all principal State agen-
cies who are appointed by the Gover-
nor.

(d) All "confidential" assistants or secretar-
ies to the aforesaid agency heads (or to
the aforesaid chief deputies and assis-
tants of agency heads) as defined in
G.S. 126-5(c)(2).

(e) All employees in policy-making posi-
tions as designated by the Governor
pursuant to the State Personnel Act as
defined in G.S. 126-5(b), and all "con-
fidential" secretaries to these individu-
als.

(f) Any other employees in the principal
state agencies, except in those agencies
headed by an elected official other than
the Governor, as may be designated by
rule of the Board subject to the approv-
al of the Governor, to the extent such
designation does not conflict with the
State Personnel Act.

(g) The members of all commissions,
boards, and councils appointed by the
Governor, with the exception of mem-
bers of those commissions, boards, and
councils which the Board determines
perform solely advisory functions.

(h) The elected heads of other principal
state agencies, and the employees of
those agencies designated by the head,
should such agency head decide to
participate in the system created by this
Order (see Section 8).

(i) Members of the Board.

Section 4. Exemption from Order.

Notwithstanding Section 3 herein, a commission,
board, or council to which the Governor appoints
members, may make a written request for the
Board to exempt its members from this Order.
The Board shall grant such requests if it finds that
such exemption does not violate the intent of this
order and in no way interferes or conflicts with the
proper and effective discharge of the official duties
of the members of the commission, board, or
council making the request. The determination of
the Board in every such case shall be final.

Section 5. Specific Prohibitions

7:22

NORTH CAROLINA REGISTER

February 15, 1993

2485

EXECUTIVE ORDER

Any exception to the following prohibitions may
only be granted by the Board upon written applica-
tion, if it finds that such activity does not violate
the intent of this Order and in no way interferes or
conflicts with the proper and effective discharge of
the official duties of the person making the re-
quest. The Board shall indicate the specific cir-
cumstances under which the exception is made and
the manner in which the exception is to be carried
out. The determination of the Board in every such
case shall be final.

(a) No person subject to this Order shall
engage activity which interferes or is in
conflict with the proper and effective
discharge of such person's official
duties.

(b) No person who is employed by the state
in a full-time position and who is sub-
ject to this Order, shall hold any other
public office or public employment for
which compensation, direct or indirect,
is received.

(c) No person subject to this Order shall
solicit in their official capacity any
gratuity or other benefit for themselves
from any other person under any cir-
cumstances.

Section 6. Statement of Economic Interest.

(a) Within thirty days from commencement
of state service or the effective date of
this Order, whichever is later, and
thereafter between April 15 and May 15
of each succeeding year, each of the
following persons subject to this Order
shall file with the Board a sworn State-
ment of Economic Interest
("Statement"):

(1) Each person appointed by the
Governor and subject to this Order.

(2) Each person subject to this Order,
whether or not appointed by the
Governor, who received $30,000.00
or more from the state.

(3) Each person subject to this Order,
irrespective of the amount of
compensation received, whose
position is subject to undue influence
(as determined from time to time by
the Board).

(4) Each person designated by the elected
head of a principal state agency
pursuant to Section 8 of this Order.

(5) Members of the Board.

(b) The Statement shall contain:

(1) The name, home address, occupation,
employer and business address of the
person filing.

(2) A list of all assets and liabilities of
the person filing which exceed a
valuation of $5,000. With respect to
each asset and liability listed, the
specific valuation need not be set
forth, but there shall be an indication
as to whether the valuation of each
asset or liability exceeds $10,000.
This list shall contain, but shall not be
limited to the following:

(A) All North Carolina real estate,
with specific description adequate
to determine the location of each
parcel ;

(B) The name of each publicly-owned
company (i.e., companies which
are required to register with the
Securities and Exchange
Commission) in which securities
owned in each company listed
exceeds $10,000.

(C) The name of each non-public-
owned company or business entity
in which securities or other equity
interest are owned, and an
indication as to whether the
valuation of the securities or
equity interest owned in each such
company or business entity listed
exceeds $10,000.

(D) With respect to the aforesaid non-
publicly-owned company or
business entities in which the
interest of the person filing
exceeds a valuation of $10,000, if
any such companies or business
entities own securities or equity
interests in other companies or
business entities, the name of each
such other company or business
entity should be listed if the
securities or other equity interests
in them held by the aforesaid non-
publicly-owned company exceed a
valuation of $10,000.

(E) If the person filing or his or her
spouse or dependent children are
the beneficiary of a trust created,
established, or controlled by the
person filing, which holds assets,
and if those assets are known, the
name of each company or other

2486

7:21

NORTH CAROLINA REGISTER

February 15, 1993

EXECUTIVE ORDER

business entity in which securities
or other equity interests are held
by the trust should be listed, with
an indication as to whether the
valuation of the securities or
equity interest held in each such
company or business entity listed
exceeds $10,000, and with the
name and address of the trustee
and a description of the trust. If
any of the aforesaid assets are
securities or other equity interests
in a corporation or other business
entity, each such corporation or
business entity should be listed
separately by name.
(F) A list of all other assets and
liabilities exceeding a value of
$5,000. including bank accounts
and debts, with an indication as to
whether each asset or liability
exceeds a valuation of $10,000.

(3) A list of all sources (not specific
amounts) of income (including capital
gains) shown on the most recent
federal and state income tax returns of
the person filing where $5,000 or
more was received from such source.

(4) If the person filing is a practicing
attorney, an indication of whether that
person, and/or his or her law firm
has, during any single year of the past
five years, earned legal fees in excess
of five thousand dollars ($5,000) from
any of the following categories of
legal representation:

(A) Criminal Law

(B) Utilities regulation or
representation of regulated utilities

(D) Taxation

(E) Decedent's estates

(F) Labor Law

(G) Insurance Law

(H) Administrative Law

(I) Real property

(J) Admiralty

(K) Negligence (representing

plaintiffs)
(L) Negligence (representing

defendants)
(M) Local Government

(5) A list of all businesses with which,
during the past five years, the person
filing has been associated, indicating

the time period of such association
and the relationship with each
business as an officer, employee,
director, partner, or a material owner
of a security or other equity interest
and indicating whether or not each
does business with or is regulated by
the state and the nature of the
business, if any, done with state.

(6) In all Statements after the first one
filed by an individual, a list of all
gifts of a value of more than $100
received during the twelve months
preceding the date of the Statement
from sources other than relatives of
the person filing and his or her
spouse, and a list of all gifts, of value
of more than $50 received from any
source having business with or
regulated by the state.

(7) Other information as may be deemed
necessary to effectuate the purpose of
this Order, as provided for by rule of
the Board.

(8) A declaration concerning any other
information or relationship which the
person filing believes may relate to
any actual or potential conflict of
interest he or she may have as an
employee of state government.

(9) A sworn certification by the person
filing that he or she has read the
Statement and that, to the best of his
or her knowledge and belief, it is
true, correct, complete and that he or
she has not transferred and will not
transfer any asset, interest, or other
property for the purpose of concealing
it from disclosure while retaining an
equitable interest therein.

(c) The person filing a Statement shall list
as specified in Section 6(b) the assets,
liabilities, and sources of income of his
or her spouse which are derived from
the assets or income of the person
filing, controlled by the person filing.
or for which the person filing is jointly
or severally liable.

(d) The Board shall issue a form for such
Statements no later than February 1 .
1993.

(e) After review and evaluation by the
Board, the Statements will be made
available by the Board for public
inspection. The Statements by the

7:22

NORTH CAROLINA REGISTER

February IS, 1993

2487

EXECUTIVE ORDER

Board members shall be filed with the
Governor and shall be made public
also.

Section 7. Duties of the Board.

(a) The Board shall review all Statements
submitted to it to determine their
conformity with the terms of this Order
and the Boards's rules, and to evaluate
the financial interest of the person filing
to determine whether there appears to
be actual or potential conflicts of
interest. The Board shall submit a
written report of each such evaluation
to the official responsible for making
the appointment of the person filing,
and to the Governor, unless the person
is filing a Statement pursuant to Section
8 of this Order, in which case a copy of
the written report shall be sent to the
elected head of that agency. The Board
may recommend remedial action with
respect to any problem which is
apparent from any Statement.

(b) Any person required to file a Statement
or his or her spouse may make a
written request to the Board to delete an
item from the Statement before it is
placed for public inspection. The
Board may grant the request if it finds
that the item:

is of a confidential nature:

does not in any way relate to the

duties of the position held or to be

held by such person; and

does not create an actual or potential

conflict of interest.

The decision of the Board in these matters

shall be final.

(c) The Board shall provide by rule for the
time, place, and manner of convenient
public inspection of the Statements:
exemptions it grants under Sections 4
or 5:

(d) The Board shall promulgate readily
understandable rules, forms, and
procedures to carry out the purposes of
this Order and shall publish them.

(e) The Board shall render opinions and
determinations on matters pertaining to
the interpretation and application of this
Order.

(f) The Board shall provide reasonable
assistance to all persons subject to this
Order in complying with the terms of

«1
(2)

(3)

this Order.

(g) The Board shall receive information
from the public concerning potential
conflicts of interest and make necessary
investigations. The Board shall

promulgate rules to protect all
employees from specious and
unfounded claims and damage to their
reputations which could result from
such claims. The Board shall

promulgate rules to protect employees
from any direct or indirect reprisals
from any source resulting from efforts
to inform the Board of the existence of
potential or actual conflicts of interest
in state government. The Board shall
promulgate rules providing for full and
fair consideration of the merits of all
complaints received, which rules shall
assure that the rights of all parties
involved in the investigation are
protected. All complaints and

allegations concerning actual or
potential conflicts of interest to be
considered by the Board must contain
the name, address, telephone number,
and oath of the individual filing such
complaint or making such allegation.
The Board shall prepare a report of
each such investigation and forward a
copy to the official responsible for
making the appointment of the person
investigated, and to the Governor,
unless the person investigated has filed
a Statement pursuant to Section 8 of
this Order, in which case a copy of the
written report shall be sent to the
elected head of that agency. The Board
may recommend remedial action with
respect to any problem revealed by
such an investigation.

(h) The Board shall request. when
necessary to accomplish the purpose of
this Order, additional information from
persons covered by this Order.

(i) The Board shall meet regularly, at the

call of the Chair, to earn,' out its duties.

(j) The Board shall submit a report

annually to the Governor on its
activities and generally on the subject
of public disclosure, ethics, and
conflicts of interest. including
recommendations for administrative and
legislative action.

(k) The Board shall perform such other

2488

7:22

SORTH CAROLINA REGISTER

February 15, 1993

EXECUTIVE ORDER

duties as may be necessary to
accomplish the purposes of this Order.

Section 8. Other Principal State Agencies.

The elected heads of other principal state
agencies (e.g.. Office of the Lieutenant Governor
and Departments of State, State Auditor, State
Treasurer, Public Education, Justice, Agriculture,
Labor, and Insurance) and the University of North
Carolina Board of Governors may, and hereby are
invited to, join in the effort represented by this
Order by providing the Chair of the Board with a
written notice of their decision to have the terms
of this Order apply to those employees under their
jurisdiction (who are not covered by the State
Personnel Act) and a list of the employees under
their jurisdiction who will be asked to submit a
Statement. All services of the Board available to
the Governor under this Order shall be available to
each of the heads of the aforesaid agencies so
deciding, and all of the services of the Board
available to employees under this Order shall be
available to employees brought within the coverage
of this Order in this manner.

Section 9. Sanctions.

The failure of any employee to make timely
filing of a required document, the intentional
making of a false or misleading declaration or an
intentional omission in a document, the failure to
cooperate with the Board, and the failure to com-
ply with the terms of this Order, shall be grounds
for disciplinary action, including discharge.

Section 10. Board Offices.

The Board and its staff, for administrative pur-
poses only, shall be located in the Department of
Administration.

Done in Raleigh, North Carolina, this the 9th
day of January in the year of our Lord, one thou-
sand nine hundred ninety-three.

7:22 NORTH CAROLINA REGISTER February 15, 1993 2489

PROPOSED RULES

TITLE 2 - DEPARTMENT OF
AGRICULTURE

i\ otice is hereby given in accordance with G.S.
150B-21.2 that the N.C. Board of Agriculture

intends to amend rules cited as 2 NCAC 38 .0701;
48A .0206 - .0207, .0216. .1702 - .1703; repeal
rules cited as 2 NCAC 48A .0212 and .0224.

1 he proposed effective date of this action is June
I. 1993.

1 he public hearing will be conducted at 10:00
a.m. on March 30. 1993 at the Board Room,
Agriculture Bldg. , 2 W. Edenton St. , Raleigh, NC
27601.

IXeason for Proposed Action:

2 NCAC 38 .0701 - To clarify technical require-
ments for LP Gas installations.

2 NCAC 48A .0206 - .0207 - Update requirements
for importation of bees into North Carolina.
2 NCAC 48A .0212 - To repeal obsolete rule.
2 NCAC 48A .0216 - Update requirements for
importation of bees into North Carolina.
2 NCAC 48A .0224 - To repeal obsolete rule.
2 NCAC 48A .1702 - Update noxious weed list.
2 NCAC 48A .1703 - Update noxious weed regu-
lated areas list.

Ksomment Procedures: Interested persons max
present their statements either orally or in writing
at the public hearing or in writing prior to the
hearing by mail addressed to David S. McLeod,
Secretary of the North Carolina Board of Agricul-
ture, P. O. Box 27647, Raleigh, NC, 27611.

CHAPTER 38 - STANDARDS DIVISION

SECTION .0700 - STANDARDS FOR
STORAGE: HANDLING AND
LNSTALLATION OF LP GAS

.0701 ADOPTION BY REFERENCE

The following are adopted by reference, in

accordanc e — with — G-rS-. — 150B 1 4 (c). — including

subsequent amendments, as standards for storage.

handling and installation of liquefied petroleum

gas:

( 1 ) National Fire Protection Association,

Pamphlet No. 58. "Storage and Handling

of Liquefied Petroleum Gases," with the

following additions and exceptions:

(a) When two or more containers are mani-
folded to a single service, each contain-
er shall be considered independent of
the other and all rules and regulations
relating to a single container shall
apply;

(b) All cut-off valves and regulating equip-
ment exposed to rain, sleet, or snow
shall be protected against such elements
either by design or by a hood;

(c) "Firm Foundation" as used in Chapter
3 of Pamphlet 58 means that the foun-
dation material has a level top surface,
rests on solid ground, is constructed of
a masonry material or wood treated to
prevent decay by moisture rot and will
not settle, careen or deteriorate;

(d) No person shall use liquefied petroleum
gas as a source of pressure in lieu of
compressed air in spray guns or other
pressure operated equipment; aftd

(e) Piping, tubing or regulators shall be
considered well supported when they
are rigidly fastened in their intended
position^ and

(f) At bulk storage installations, the con-
crete bulkhead or equivalent anchorage
and the plant piping on the hose side of
the bulkhead or equivalent anchorage
shall be engineered and constructed so
that any direction of pull on the liquid
or vapor loading or unloading piping
will not result in damage to the bulk
plant piping on the tank side of the
bulkhead or equivalent anchorage.

(2) National Fire Protection Association.

Pamphlet No. 54, "National Fuel Gas

Code," with the addition that

underground service piping shall rise

above ground immediately before

entering a building.

Copies of Pamphlet No. 54 and Pamphlet No. 58

are available for inspection in the Office of the

Director of the Standards Division and mav be

obtained at a cost as determined by the publisher

by contacting National Fire Protection Association.

Inc.. Batterymarch Park. Qiiiney, Massachusetts

02269.

Statutory Authority G.S. 119-55; 150B-14.

CHAPTER 48 - PLANT INDUSTRY

SUBCHAPTER 48A - PLANT PROTECTION

2490

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NORTH CAROLINA REGISTER

February 15, 1993

PROPOSED RULES

SECTION .0200 - HONEY AND BEE
INDUSTRY

.0206 THE TRANSPORTATION OF
BEES

The transportation or importation into North
Carolina from any other state or country of bees of
the superfamily apoidea in any stage of
development, the causal agents of their diseases or
disorders, their pests, their products, nests or
hives, and associated equipment are prohibited
except under the following conditions:

(1) All bees of the superfamily apoidea
except apis mellifera and cross bred
strains of apis mellifera with other
species of apis that are naturalized in the
United States shall be allowed entry into
North Carolina only by scientific permit.
Procedures for obtaining scientific
permit:

(a) An application for a permit to move
regulated articles shall be obtained
from:

State Apiarist

Plant Industry Division

North Carolina Department of

Agriculture

Post Office Box 27647

Raleigh, North Carolina 27611

This application should be returned to the State

Apiarist for processing;

(b) Decisions on acceptance or rejection of
applications for movement of regulated
articles for scientific purposes are based
on the following criteria:

pest or disease risk hazard;

safeguards against spread which can

be applied;

amount of material involved;

biological conditions in the area in

which the regulated article is to be

moved;

method of packaging and method of

shipment to be employed;

use for which the regulated articles is

to be applied;

(2) Bees of the species, apis mellifera and
strains of apis mellifera cross bred with
other species of apis that are naturalized
in the United States herein referred to as
bees and their equipment and products
may be allowed entry into North Carolina
under the following conditions:

(a) Live adult bees in cages, without combs
or foundation provisioned with "candy"

(i)
(ii)

(iii)
(iv)

(V)

(vi)

or "syrup" made from sugar and boiled
honey possessing a valid certificate of
inspection will be admitted when not
from an area under quarantine; The

certificate e-f- inspection mu s t

specifically show or be accompanied by
certification of apparent freedom from
the honeybee tracheal mite, Acnrapis
woodi. Rcnnic. — The certification mu s t
be based on in s pection, sampling, and
laboratory analy s is criteria as required
by the State Apiarist;

(b) Bees on combs or foundation, nuclei,
used hives, used combs and other used
apiary equipment of any kind are
prohibited except by permit issued
according to the provisions of these
rules;

(c) New or unused apiary equipment and
products packed for nonbee
consumption may be transported into
North Carolina without restriction;

(d) Pollen shipped for bee food may be
transported into North Carolina when
free of bee disease;

(e) Nuclei of commercial beekeepers or a
beekeeper who is not regularly in the
business of raising queens, package
bees or nuclei for sale are prohibited
except by permit issued according to
the provisions of these rules;

(f) Nuclei of queen breeders, package bee
producers, or nuclei producers may be
accompanied by a valid certificate of
apiary inspection issued by the proper
official of the state of origin and
marked with the North Carolina
compliance agreement number. A
compliance agreement may be made
between the State Apiarist and those
rearing bees for sale as nuclei in other
states providing the shipper agrees to
the conditions in the compliance
agreement;

(g) The transportation into North Carolina
from any other state or country of bees
on comb, used hive bodies, frames,
combs and other apiary equipment may
be allowed into North Carolina when
each shipment is accompanied by a
valid permit issued by the State
Apiarist; any colony or colonies of bees
or used apiary equipment of any kind
found to be moving or to have been
moved into North Carolina in violation

7:22

NORTH CAROLINA REGISTER

February 15, 1993

2491

PROPOSED RULES

of the requirements of this Section shall

be subject to seizure, destruction, or

such other disposition as shall be

determined by the State Apiarist, or

other authorized inspector, without

compensation to the owner;

(3) Bees may be transported freely within

North Carolina except as restricted by

quarantine, clean-up areas, or other rules

herein.

Statutory Authority G.S. 106-634 through 106-644.

.0207 REQUIREMENTS FOR
ISSUANCE OF PERMIT

(a) No permits for entry' into North Carolina
will be issued until the following information has
been filed with the State Apiarist:

( 1 ) A valid certificate of apiary inspection
from the State Entomologist or apiary
inspector of the state of origin of said
bees and equipment to the effect that
said bees and equipment have been
inspected within 60 days of the
proposed date of entry into North
Carolina and found apparently free
from contagious and infectious diseases,
and giving the number of colonies
inspected, date of inspection, whether
all of the bees owned by the owner of
said bees were inspected and included
in the certificate; certificates not
meeting the requirements of the State
Apiarist regarding specific diseases
inspected for and thoroughness of
inspection may be rejected;

(2) If the bees and equipment have been in
more than one state during the year
previous to the date on the certificate
filed with the North Carolina State
Apiarist, a certificate for each state the
bees have been in must be filed with
the North Carolina State Apiarists;

(3) A statement from the owner of said
bees and equipment giving the number
of colonies of bees and amount of
equipment to be brought into North
Carolina, the proposed date of entry
into the state, and where the bees and
equipment will be located in the state;
Exception: permits may be issued to
beekeepers in states having no
inspection service when the State
Apiarist feels he has sufficient evidence
to assure that the bees are not infected

with foulbrood or any other dangerous
disease;

(4) Permission from the owner of said bees
has been given for North Carolina
inspectors to inspect at any time the
bees and equipment while in North
Carolina;

(5) A permit may be granted for used
beekeeping equipment without bees
upon receipt of one of the following:

(A) A statement from the State
Entomologist or state apiary inspector
of the state of origin that the bees on
which the equipment was last used
have been inspected and found free of
American foulbrood or other
dangerous diseases;

(B) The equipment has been fumigated
wrtb — ethylene — oxide — m — accordance
with — label — direction s or otherwise
sterilized in such a manner that in the
opinion of the State Apiarist the
equipment is not infested with free of
infectious American foulbrood or
other dangerous disease;

(6) The State Apiarist may require
specified marking or other identification
of used beekeeping equipment as a
prerequisite for granting a permit;

(7) The State Apiarist may require special
treatments, or fumigations as a
prerequisite for granting a permit from
areas under quarantine:

(8) The State Apiarist may waive parts of
these requirements if he has sufficient
evidence to believe the bees are
disease-free.

(b) The proposed location of imported bees and
bee equipment in North Carolina shall be approved
by the State Apiarist in advance of issuance of a
permit. The following criteria may be considered
in making a determination that the requested
movement of bees or equipment could create or
lead to overcrowding of bees or other detrimental
conditions at the proposed site:

(1) The bees population or density in the
proposed entry area and proximity to
other bees with respect to creation of
conditions favoring honeybee stress
diseases or increased disease or pest
spread hazard;

(2) The number of colonies for which the
entry permit is requested;

(3) The adequacy of the honey pasture in
the proposed entry area;

2492

7:22

NORTH CAROLINA REGISTER

February 15, 1993

PROPOSED RULES

(4) The effect on incorporated cities in
North Carolina or any local bee
ordinance;

(5) The effect on honeybee research being
conducted in North Carolina;

(6) The effect on honeybee disease
quarantine or clean-up areas in North
Carolina;

(7) Any previous locations or enforcement
histories in North Carolina;

(8) Any unusual or mitigating
circumstances; and

(9) The timing of the request.

Statutory Authority G.S. 106-634 through 106-644.

.0212 COLONIES OF BEES FOR

SALE IN NORTH CAROLINA

Colonics of honeybees owned by individuals not
regularly in the busines s of selling bees may be
sold without inspection and health certification.
However, no one shall knowingly sell diseased
bee s or contaminated equipment.

Statutory Authority G.S. 106-634 through 106-644.

.0216 FUMIGATION OR STERILIZATION
OF APIARY EQUIPMENT

(a) The State Apiarist may allow fumigation or
sterilization of diseased bee equipment in lieu of
destruction. Fumigation shall be in a miskoe type
vacuum — fumigation — chamber — utilizing — ethylene
oxide in accordance with label direction s .

(b) If fumigation by private sources is not
readily available, the State Apiarist may provide
and operate the chamber for fumigation of diseased
bee equipment in lieu of destruction. The
beekeeper shall pay for the cost of ethylene oxide
gas the fumigant used in these and all fumigations
made at request of the beekeeper.

(c) The State Apiarist may perform other
fumigations without charge for research and
methods improvement and in some cases where
sterilization or disinfection is not required the
inspector may fumigate materials of questionable
hazard as a buffer or supplement to a disease
clean-up without charge.

(d) The State Apiarist shall dispose of honey,
wax or bee equipment abandoned in connection
with the fumigation program in a manner where
there is no disease spread hazard.

Statutory Authority G.S. 106-634 through 106-644.

.0224 POISONING OF HONEYBEES

BY PESTICIDES

For the purpo s e of this Section the following
shall apply:

fH Requests for assi s tance in diagno s i s of

honeybee poisoning s will be responded to
as quickly as po ss ible after the poisoning
has occurred if it i s a recent ease (less
than — a — month — after- — poi s oning — has
occurred);

Old — ca s e s — ©f- — poi s oning — w+H be

investigated the next time the inspector's
schedule take s him to the area;
Diagnosis of poisonings will be made
according — to — the — established — ASCS
criteria;
-G

made for

crtitioation of poisonings i s
beekeepers requesting beekeeper pesticide
poison — indemnity — from — the — ASCS
according to their established criteria;

{§) Inve s tigation s may be made to determine

which pesticides are unsafe to bee s and
findings — made — available — te — persons
determining u s e patterns of pe s ticides in
North Carolina;

(9-

tep

nve s tigations may be made to deve
management — practices — te — protect — bees
from pesticide damage;

f7-} Beekeepers may be assisted in treatment

or management of bees for recovery from
pe s ticide damage.

Statutory Authority G.S. 106-634 through 106-644.

SECTION .1700 - STATE NOXIOUS WEEDS

.1702 NOXIOUS WEEDS

(a) Class A Noxious Weeds. The North
Carolina Board of Agriculture hereby incorporates
by reference, including subsequent amendments
and editions of the referenced materials, the
following list of Class A Noxious Weeds:

UJ all All weeds listed in 7 C.F.R.

§360.200. Copies of the Code of

Federal Regulations may be obtained

from the Superintendent of Documents.

Government Printing Office,

Washington, DC 20402, at a cost

determined by that office;

Elodea. African ~ Lagarosiphon spp.

(all species);

Fern, Water ~ Salvinia spp. (all except

S. rotundifolia);

Stonecrop. Swamp ~ Crassula helmsii;

ill

<4]

Water-chestnut ~ Trapa spp.

(b) Class B Noxious Weeds. The North

7:22

NORTH CAROLINA REGISTER

February 15, 1993

2493

PROPOSED RULES

Carolina Board of Agriculture hereby establishes
the following list of Class B Noxious Weeds:

(1) Betony, Florida--Stachys floridana
Shuttlew.;

(2) Fieldcress, Yellow--Rorippa sylvestris
(L.) Bess.;

(3) Loosestrife, Purple — Lythrum salicaria

(4) @) Puncturevine--Tribulus terrestris
L.;

(5) f4) Thistle, Canada— Cirsium arvense
(L.) Scop.;

(6) (5-) Thistle, Musk— Carduus nutans L.;

(7) {6) Thistle, Plumeless— Carduus
acanthoides L.;

(8) Watermilfoil. Eurasian — Mvriophvllum
spicatum L.:

(9) Waterprimrose, Uruguay — Ludwigia
uruguayensis (Camb.) Hara.

(c) Class C Noxious Weeds. The North
Carolina Board of Agriculture hereby establishes
the following list of Class C Noxious Weeds:
none.

(d) Other Noxious Weeds. The Commissioner
may take appropriate action against any other
noxious weed as provided in the Plant Pest Law,
Article 36, Chapter 106 of the General Statutes.

Statutory Authority G.S. 106-420.

.1703 REGULATED AREAS

(a) Except as permitted in 2 NCAC 48A .1705
and .1706, the following is prohibited:

(1) The movement of Canada Thistle
[Cirsium arvense (L.) Scop.] or any
regulated article infested with Canada
Thistle from the following counties is
prohibited: Ashe, Avery, Haywood,
Mitchell, Northampton, Yancey;

(2) The movement of Class A or B noxious
weeds or any regulated article infested
with Class A or B noxious weeds into
North Carolina is prohibited;

(3) The movement of a Class A noxious
weed or any regulated article infested
with any Class A noxious weed is
prohibited throughout the State;

(4) The movement of Eurasian
Watermilfoil (Mvriophyllum spicatum
L.) or any regulated article infested
with Eurasian Watermilfoil from the
following counties is prohibited:
Halifax, Northampton, Perquimans.
Tyrrell. Warren;

(5) {4) The movement of Florida Betony

(Stachys floridana Shuttlew.) or any
regulated article infested with Florida
Betony from the following counties is
prohibited: Brunswick, Cumberland,
Forsyth, Hoke, New Hanover, Onslow,
Wake;

(6) f§) The movement of Musk Thistle
(Carduus nutans L.) or any regulated
article infested with Musk Thistle from
the following counties is prohibited:
Buncombe, Cleveland, Chatham.
Gaston, Henderson^ Lincoln, Madison,
Randolph. Rowan, Rutherford ;

(7) (4) The movement of Plumeless Thistle
(Carduus acanthoides L.) or any
regulated article infested with Plumeless
Thistle from the following counties is
prohibited: Jackson, Haywood,
Madison, Watauga;

(8) f?) The movement of Puncturevine
(Tribulus terrestris L.) or any regulated
article infested with Puncturevine from
the following counties is prohibited:
Durham, New Hanover;

(9) The movement of Purple Loosestrife
(Lythrum salicaria L.) or any regulated
article infested with Purple Loosestrife
from the following counties is prohibit-
ed: Forsyth, Watauga:

(10) The movement of Uruguay
Waterprimrose rLudwigia uruguayensis
(Camb.) Hara.l or any regulated article
infested with Uruguay Waterprimrose
from the following counties is
prohibited: Bladen, Brunswick,
Columbus, Durham. Granville. Hyde.
New Hanover. Orange. Rowan. Wake.
Warren;

(11) t&) The movement of Yellow
Fieldcress [Rorippa sylvestris (L.)
Bess.] or any regulated article infested
with Yellow Fieldcress from the
following county is prohibited:
Orange.

(b) Other regulated areas. The Commissioner
may take appropriate action as authorized under
the Plant Pest Law, Article 36, Chapter 106 of the
General Statutes, to designate as a regulated area
any state or portion of a state in which he has
reasonable cause to believe that a noxious weed
exists, and there is an immediate need to prevent
its introduction, spread or dissemination in North
Carolina.

Statutory Authority G.S. 106-420.

2494

7:22

NORTH CAROLINA REGISTER

February 15, 1993

PROPOSED RULES

Notice is hereby given in accordance with G.S. 150B-21.2 that the N.C. Board of Agriculture intends to
amend rules cited as 2 NCAC 43L .0401 - .0403 and .0405.

1 he proposed effective date of this action is October 1 , 1993.

1 he public hearing will be conducted at 10:00 a.m. on March 30, 1993 at the Board Room, Agriculture
Bldg., 2 W. Ed en ton St., Raleigh, NC, 27601.

Reason for Proposed Action: To increase fees for the use of the Western North Carolina Farmers Marker.

(comment Procedures: Interested persons may present their statements either orally or in writing at the
public hearing or in writing prior to the hearing by mail addressed to David S. McLeod, Secretary of the
North Carolina Board of Agriculture, P. O. Box 27647, Raleigh, NC, 27611.

CHAPTER 43 - MARKETS

SUBCHAPTER 43L - MARKETS

SECTION .0400 - FEES: WESTERN NORTH CAROLINA FARMERS MARKET

.0401 RETAIL BUILDINGS

Rental charges for space in the "Retail Buildings" shall be at the rate of five dollars ($5.00) per day or thirty
-five dollars ($30.00) ($35.00) per week per assigned space of 10 feet by 20 feet from June through October
and two dollars ($2.00) per day wh e n th e spac e is us e d or fourteen dollars ($14.00) per week during the
months of November through May. A holding fee often dollars ($10.00) per month shall b e charg e d during
Dec e mb e r. January. February and March for each space to be rented on April 1 .

Statutory Authority G.S. 106-530.

.0402 GATE FEES

Gate fees for farmers or truckers who do not otherwise rent stall spaces at the Market shall be as follows:

Cars Vehicles. 5 cartons or less
than 5 cartons

Pickups

Ton trucks/6 wheelers :

50 cartons or less
More than 50 cartons

10 Wheeler:

50 cartons or less

51 to 100 cartons
More than 100 cartons

18 Wheeler:

20 cartons or less

21 to 100 cartons

101 cartons to half load
More than half load

7:22 NORTH CAROLINA REGISTER February 15, 1993 2495

Resident

Non-Resident

Sellers

$ 1.00

4^0 5.00

SrQO 6.00

4^0 5.00

5^0 6.00

6r00 7.00

7-rOO 8.00

4t00 5.00

5^00 6.00

6^00 7.00

7-^0 8.00

8^00 9.00

§-£0 6.00

5^00 6.00

7-tOQ 8.00

7-tOO 8.00

8^0 9.00

8^00 9.00

10.00

PROPOSED RULES

Trucks which deliver such items as soft drinks, candy, snack bar supplies and freight are exempt from the
gate fees stated in this Rule.

Statutory Authority G.S. 106-530.

.0403 FARMERS AND TRUCKERS SHEDS

Rental charges for space under the "Farmers and Truckers Sheds" for each 12 foot wide stall shall be six
dollars ($6.00) per day,, forty dollars ($40.00) per week, or one hundred twenty five thirty-five dollars
($125.00) ($135.00) per month from June through October , s eventy five i five dollars ($5.00) per day, thirty
dollars ($30.00) per week, or eighty-five dollars ($75.00) ($85.00) per month for April, May, November and
December^ and fifty five dollars ($5.00) per day, twenty dollars ($20.00) per week, or sixty dollars ($50.00)
($60.00) per month for January, February, and March. Electricity used shall be paid for in addition to these
regular fees. A holding fee of ten twenty dollars ($10.00) ($20.00) per month shall be charged during
December, January, February and March for each space to be rented on April 1.

Statutory Authority G.S. 106-530.

.0405 YEARLY DELIVERY PERMIT

Truckers, farmers, or wholesalers making regular deliveries to the market may obtain a yearly delivery
permit for ene three hundred and fifty dollars ($150.00 ) ($300.00) . These permits shall expire December 31
of the year purchased.

Statutory Authority G.S. 106-22: 106-530.

TITLE 10 - DEPARTMENT OF
HUMAN RESOURCES

1\ otice is hereby given in accordance with G.S.
150B-21.2 that DHR/Secretary's Office intends to
adopt rule cited as 10 NCAC ID .0107.

1 he proposed effective date of this action is May
1. 1993.

Instructions on How to Demand a Public Hearing
(must be requested in writing within 15 days of
notice): Written demand for a public- hearing may
be directed to Rose Tlwmpson , N. C. Department
of Human Resources, 101 Blair Drive. Raleigh.
NC 27603 on or before March 3. 1993.

Reason for Proposed Action: Tfie Department is
frequently asked by persons and organizations to
provide copies of departmental material and
records. Often this is expensive and time consum-
ing.

l^omment Procedures: Written comments may be
directed to Rose Thompson , N. C. Department of
Human Resources. 101 Blair Drive. Raleigh, NC
27603 on or before March 17. 1993.

CHAPTER 1 - DEPARTMENTAL RULES

SUBCHAPTER ID - LNFORMATION
SECTION .0100 - PUBLIC INFORMATION

.0107 FEES

A fee of ten cents ($0. 10) per page shall be
charged by the Department of Human Resources,
Central Administration to persons requesting
material from department records.

Statutory Authority G.S. 12-3.1; 143B-10; 150B-
11.

y^c^:^(^:^^:^:^:^e^:^:^c

;£ $z % Jj:

ll otice is hereby given in accordance with G.S.
150B-21.2 that DHR/Secretary's Office intends to
adopt rules cited as 10 NCAC 1M .0001 - .0008.

1 he proposed effective date of this action is May
1. 1993.

Instructions on How to Demand a Public Hearing
(must be requested in writing within 15 days of
notice): Written demand for a public hearing may
be directed to Steven P. Rader (or successor).
General Counsel, N. C. Department of Human

2496

7:22

NORTH CAROLINA REGISTER

February 15, 1993

PROPOSED RULES

Resources, 101 Blair Drive, Raleigh, NC 27603 on
or before March 3, 1993.

Reason for Proposed Action: 28 CFR . 107(b),
implementing the Americans with Disabilities Act
(ADA) requires adoption of grievance procedures
to resolve complaints under Title II of the ADA.

(comment Procedures: Written comments may be
directed to Steven P. Rader (or successor), Gener-
al Counsel, N. C. Department of Human Resources,
101 Blair Drive, Raleigh, NC 27603 on or before
March 17, 1993.

CHAPTER 1 - DEPARTMENTAL RULES

SUBCHAPTER 1M - ADA GRIEVANCE
PROCEDURES

.0001 APPLICABILITY AND SCOPE

This Subchapter provides for the prompt and
equitable resolution of complaints against any
division within the Department of Human Resourc-
es alleging any action prohibited by the U.S.
Department of Justice regulations implementing
Title II of the Americans with Disabilities Act, 28
CFR Part 35.

Authority 28 C.F.R. 35.107.

.0002 COMPLALNTS

(a) A complaint shall be filed m writing, contain
the name and address of the person filing it, and
briefly describe the alleged violation of 28 CFR
Part 35. If the complainant requires secretarial
assistance in preparing the complaint due to his
disability, the Division ADA Coordinator shall
provide such assistance upon request of the com-
plainant.

(b) A complaint shall be filed with the Division
ADA Coordinator within 60 days after the com-
plainant becomes aware of the alleged violation.
Allegation of discrimination which occurred prior
to the effective date of these Rules will be consid-
ered on a case by case basis.

Authority 28 C.F.R. 35.107.

.0003 INVESTIGATION

An investigation of the allegations of the com-
plaint shall be conducted by a Section Chief
designated by the Division ADA Coordinator. The
investigation shall be informal but thorough afford-

ing all interested persons and their representatives,
if any, an opportunity to submit evidence relevant
to the complaint.

Authority 28 C.F.R. 35.107.

.0004 WRITTEN DETERMINATION

A written determination as to the validity of the
complaint and a description of the resolution, if
any, shall be issued by the Division ADA Coordi-
nator and a copy forwarded to the complainant no
later than 30 days after the filing of the complaint.

Authority 28 C.F.R. 35.107.

.0005 RECONSIDERATION

(a) The complainant may request a reconsidera-
tion of the determination as to the validity of the
complaint in instances where he is dissatisfied with
the resolution. The request for reconsideration
shall be made to the Division Director within 30
days of the issuance of the determination of validi-
ty

(b) A written determination to ffie request for
reconsideration shall be issued by the Division
Director or his designee, and copy forwarded to
the complainant and ADA Coordinator within 30
days after the filing of a request for reconsidera-
tion.

Authority 28 C.F.R. 35. 107.

.0006 RECORDS

The Division ADA Coordinator shall maintain
the files and records of the Division relating to the
complaints filed, written determinations issued,
and any reconsiderations requested or issued.

Authority 28 C.F.R. 35.107.

.0007 OTHER REMEDIES

The right of a person to a prompt and equitable
resolution of the complaint filed under this Sub-
chapter shall not be impaired by the person's
pursuit of other remedies such as the filing of an
ADA complaint with the responsible federal
department or agency. Use of the procedures of
this Subchapter is riot a prerequisite for the pursuit
of other remedies.

Authority 28 C.F.R. 35.107.

.0008 CONSTRUCTION

This Subchapter shall be construed to protect the
substantive rights of interested persons to meet

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2497

PROPOSED RULES

appropriate due process standards and to assure
that the Department and the Divisions comply with
Title H of the Americans with Disabilities Act and
implementing regulations.

Authority- 28 C.F.R. 35. 107.

TITLE 1 1 - DEPARTMENT OF
INSURANCE

Notice is hereby given in accordance with G.S.
150B-21.2 that the N.C. Department of Insurance
intends to adopt rules cited as 11 NCAC 16 .0301
- .0303.

1 he proposed effective date of this action is May
3. 1993.

1 he public hearing will be conducted at 10:00
a.m. on March 5, 1993 at the Dobbs Building,
Tfiird Floor Hearing Room, 430 N. Salisbury
Street. Raleigh, N.C. 27611.

iXeason for Proposed Action: To provide for
interpretative and substantive rules in the imple-
mentation of the Small Group Health Insurance
Reform Act. .

(comment Procedures: Written comments may be
sent to Walter James, P.O. Box 26387, Raleigh,
N. C. 27611. Oral presentations may be made at
the public hearing. Anyone having questions
should call Walter James at 733-3284 or Ellen
Sprenkel at 733-4529.

tLditor's Note: Tltese Rules were filed as tempo-
rary rules effective January 25, 1993 for a period
of 180 days or until the permanent rule becomes
effective, whichever is sooner.

CHAPTER 16 - ACTUARIAL SERVICES
DIVISION

SECTION .0300 - SMALL EMPLOYER
GROUP HEALTH ESTSURANCE

.0301 DEFECTIONS AND SCOPE

(a) The definitions contained in G.S. 58-50-1 10
are incorporated into this Section by reference.

(b) This Section applies to all health benefit
plans and carriers subject to the North Carolina

Small Employer Group Health Coverage Reform
Act.

Statutory Authority G.S. 58-2-40; 58-50-1 30(b).

.0302 RESTRICTIONS ON PREMIUM
RATES

(a) Each class of business shall have its own rate
manual. The rate manual will be used to:

Audit the actuarial certification with

ill

(2)

regards to the relationship of one em-
ployer group to the others within a
class; and

Determine compliance with the relation-
ship of one class to the other classes.

(bj The requirement in G.S. 58-50-130(b)(2)

that within a class the premium rates charged
during a rating period to small employers shall not
vary' from the index rate by more than 35 percent
shall be met as follows:

(1 ) The carrier shall calculate for each
class of business, using the rate manual
for that class, an index rate for each
plan of benefits and for each small
employer census within that class of
business.

(2) For each small employer within a given
class of business, the carrier shall cal-
culate the ratio of the premium rate
charged the small em ployer during the
rating period to the index rate for the
census, plan of benefits, and class of
business of that small employer calcu-
lated in Subparagraph ( 1 ) of this Para-
graph.

(3) The ratio calculated in Subparagraph
(2) of this Paragraph shall be between
.65 and 1.35. inclusive.

Other methods may be used if the results will be
equivalent.

(cj The requirement in G.S. 58-50- 130(b)(1) that
the index rate for a rating period for any class of
business shall not exceed the index rate for any
other class of business by more than 25 percent
shall be met as follows:

( 1 ) The carrier shall define a representative
census of its business and a representa-
tive actuarially equivalent plan of bene-
fits.

(2) The carrier shall calculate an index rate
based upon Subparagraph ( 1 ) of this
Paragraph for each class of business.

(3) The carrier shall identify the class of
business with the lowest index rate.

(4) The ratio of the index rate calculated

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PROPOSED RULES

for each class of business in Subpara-
graph (2) of this Paragraph to the low-
est index rate identified in Subpara-
graph (3) of this Paragraph shall be
between 1 .00 and 1 .25, inclusive.
Any change in the representative census or repre-
sentative actuarially equivalent plan of benefits
used in Subparagraphs ( 1 ) through (4) of this
Paragraph shall be specifically documented and the
test must be performed on both the previous and
new census or actuarially equivalent plan of
benefits at the time of change; and the results of
both tests shall be disclosed within the annual
actuarial certification filing. Other methods may
be used if the results will be equivalent.

(d) The acceptability of a proposed rate increase
for a small employer for health benefit plans
issued on or after January L, 1992, shall be deter-
mined as follows:

(1) Calculate a new business premium rate
for the new rating period using the
actual census and plan of benefits for
the small employer at the beginning of
the new rating period.

(2) Calculate a now business premium rate
for the prior rating period using the
actual census and plan of benefits for
the small employer at the beginning of
the prior rating period.

(3) Divide Subparagraph (1) of this Para-
graph by Subparagraph (2) of this
Paragraph and multiply this quotient by
the gross premium in effect at the
beginning of the prior rating period.
This product is fhe maximum renewal
premium for the new rating period
associated with G.S. 58-50- 130(b)(3)a
and G.S. 58-50-130(b)(3)c.

(4) Subparagraph (3) of this Paragraph may
be adjusted by a percentage of the gross
premium in force before renewal. This
percentage shall not exceed 15 percent
per year prorated for the months
elapsed between the previous and the
new rating dates.

(5) Multiply Subparagraph (3) of this Para-
graph by one plus the percentage m
Subparagraph (4) of this Paragraph .

The maximum renewal rate increase is Subpara-
graph (5) of this Paragraph if Paragraphs (b) and
(c) of this Rule are satisfied. If the resulting
maximum renewal rate increase calculated in
Subparagraph (5) of this Paragraph does not satisfy
Paragraphs (b) and (c) of this Rule, the maximum
renewal premium shall be reduced until Paragraphs

(b) and (c) of this Rule are satisfied. Other meth-
ods may be used if the results will be equivalent,
(e) The acceptability of a proposed rate increase
for a small employer for health benefit plans
issued before January 1, 1992. shall be determined
as follows:

(1) Calculate a new business premium rate
for the new rating period using the
actual census and plan of benefits for
the small employer at the beginning of
the new rating period.

(2) Calculate a new business premium rate
for the prior rating period using the
actual census and plan of benefits for
the small employer at the beginning of
the prior rating period.

(3) Divide Subparagraph (1) of this Para-
graph by Subparagraph (2) of this
Paragraph and multiply this quotient by
the gross premium in effect at the
beginning of the prior rating period.
This product is the maximum renewal
premium for the new rating period
associated with G.S. 58-50-130(b)(7)a
and G.S. 58-50-l30(b)(7)b.

(4) The ratio of Subparagraph (3) of this
Paragraph to its associated index rate
shall not exceed the ratio of the gross
premium in effect before January L,
1992, and its associated index rate in
effect before January J^ 1992.

The maximum renewal rate increase in Subpara-
graph (4) of this Paragraph is not subject to Para-
graphs (b) and (c) of this Rule during a three-year
transition period ending January L, 1 995 . After
January _L 1995, the acceptability of a proposed
rate increase for a small employer shall be based
only on Paragraph (d) of this Rule. Other methods
may be used if the results will be equivalent.

Statutory Authority G.S. 58-2-40; 58-50-1 30(b).

.0303 ANNUAL FILING

Each carrier shall make a filing with the Depart-
ment as of March 15 of each year for each class of
insurance administered under this Rule. The filing
shall include:

(1) An actuarial certification stating that:

(a) The carrier is in compliance with all
provisions of this Section; and

(b) The rating methods of fiie carrier are
actuarially sound.

(2) A list and description of each class of
business in the State. The description
shall include:

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2499

PROPOSED RULES

(a) The category of the class as described
in G.S. 58-50-113;

(b) Whether or not the class is open to new
business; and

(c) If the number of classes in a particular
category exceeds three, the initial filing
must include a request for approval of
the additional classes.

(3) A written description of the definition of
the representative census used in 1 1
NCAC 16 .0302(c) and a statement that
the representative census has either
changed or not changed during the period
between annual filings.

(4) A written description of the definition of
the representative actuarially equivalent
plan of benefits used in JJ. NCAC 16
.0302(c) and a statement that the repre-
sentative actuarially equivalent plan of
benefits has either changed or not
changed during the period between annu-
al filings.

(5) A statement that the test outlined in 1 1
NCAC 16 .0302(c) has been performed
on both the previous and new definitions
of the representative census and the
actuarially equivalent plan of benefits, if
such definitions have changed.

(6) A written description of the results of the
test performed in Paragraph (5) of this
Rule and an explanation addressing the
reason for changing either the definition
of the representative census or the repre-
sentative actuarially equivalent plan of
benefits, or both.

An acceptable format for the actuarial certification
is on file at the Department. Copies may be
obtained from the Department at the cost for
copies stated in G.S. 58-6-5(3).

Statutory Authority G.S. 58-2-40; 58-50-130.

TITLE 21 - OCCUPATIONAL
LICENSING BOARDS

Notice is hereby given in accordance with G.S.
1 SOB -2 1.2 that the N. C. State Board of Cosmetic-
Art Examiners intends to amend rules cited as 21
NCAC 14A .0101; 14N .0106 and .0113.

1 he proposed effective date of this action is May
3, 1993.

1 he public hearing will be conducted at 1:30
p.m. on March 8, 1993 at the Grove Towers, Fifth
Floor. 1110 Navaho Dr., Raleigh, N. C.

Ixeason for Proposed Action:

21 NCAC 14A .0101 - To identify some hair styles
included in the practice of Cosmetology.
21 NCAC 14N .0106 - To establish separation of
interpreter and model.

21 NCAC 14N .0113 - To establish that all appli-
cants have a limited number of times they can fail
an exam - (g) method by which an apprentice
examinee can obtain a cosmetology license other
than an apprenticeship.

Comment Procedures: Die record shall be open
for 30 days to receive written or oral comments.
Written comments should be received by the N. C.
State Board of Cosmetic Art Examiners by March
17. 1993. and requests to speak must be in writing
and received by March 1. 1993 prior to hearing,
to be considered as part of the hearing record.
Comments should be addressed to Vicky R.
Goudie, Executive Secretary, N. C. State Board of
Cosmetic Art Examiners, 1110 Navaho Dr.,
Raleigh, N.C. 27609. Speaking time 5 minutes.

CHAPTER 14 - BOARD OF COSMETIC
ART EXAMLNERS

SUBCHAPTER 14A - DEPARTMENTAL
RULES

SECTION .0100 - ORGANIZATIONAL
RULES

.0101 DEFLNITIONS

The following definitions apply in this Chapter:

(1) "Beauty Establishment" refers to both
cosmetic art schools and cosmetic art
shops.

(2) "Board" refers to the North Carolina
State Board of Cosmetic Art Examiners.

(3) "Cosmetic Art School" refers to any
place where cosmetic art, as defined by
G.S. 88-2, or methods of teaching
cosmetic art are taught for purposes of
licensing by the Board regardless of the
title of the school or program.
"Cosmetic Art" includes all methods and
styles of braiding the hair, coloring the
hair, and extending or thickening an
individual's own hair by the

2500

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NORTH CAROLINA REGISTER

February 15, 1993

PROPOSED RULES

incorporation of additional hair.

(4) "Cosmetic Art Shop" refers to any
building, or part thereof, wherein
cosmetic art, as defined by G.S. 88-2, is
practiced, other than a cosmetic art
school.

(5) "Cosmetology School" is any cosmetic
art school which teaches cosmetology as
defined by G.S. 88-2, Paragraph 2, but is
not a manicurist school.

(6) "Cosmetology Student" is a student in
any cosmetic art school with the
exception of a manicurist student.

(7) "Cosmetology Teacher" is any teacher
who is licensed by the Board to teach the
cosmetic arts.

(8) "Manicuring" is that set of cosmetic arts
related to the nails, hands, arms and feet.
It includes traditional manicuring,
pedicuring, arm and hand massages, and
all types of artificial nails.

(9) "Manicurist School" is a cosmetic art
school which teaches only the cosmetic
arts of manicuring.

(10) "Manicurist Student" is a student in any
cosmetic art school whose study is
limited to the manicurist curriculum set
forth in 21 NCAC 14K .0002.

(11) "Manicurist Teacher" is a teacher who is
licensed by the Board to teach only the
manicuring curriculum.

(12) "Booth" is a work station within a
cosmetic art shop which is used primarily
by one cosmetologist or manicurist in
performing cosmetic art services for their
clientele. "Booth" does not include the
reception area, lavatories, common
hair-drying facilities, common
shampooing facilities or other areas used
in common by the cosmetologists or
manicurists working within a cosmetic art
shop.

Star it ton Authority G.S.

-1.

SUBCHAPTER 14N - EXAMINATIONS
SECTION .0100 - GENERAL PROVISIONS

.0106 USE OF AN INTERPRETER

(a) A candidate whose native language is not
English may apply for permission to bring an
interpreter to the examination, if the candidate is
unable to speak, read, or write English at a tenth
grade level.

(b) The interpreter shall be:

(1) 18 years old or older, and

(2) fluent in both English and the
candidate's native or other language.

(1) be currently or formerly licensed by
this state or any state, nor have
received or is currently receiving any
training, in any branch of cosmetic art;

(2) be a current or former owner or
employee of any beauty establishment:

(3) be simultaneously a model for any
candidate taking the examination.

(d) The application for permission to use an
interpreter shall be made on a form provided by
the Board.

Statutory Authority G.S. 88-10(2); 88-12(2);
88-16; 88-17; 88-21 (a)( 16); 88-23; 88-30(4).

.0113 REEXAMINATION

(a) If, upon application for re-examination, the
applicant has taken and passed one section of an
examination, he or she shall apply for
re-examination only on the section of the
examination which he or she did not pass.

(b) Applicants for re-examination must apply for
re-examination in writing and pay the appropriate
examination fee.

(c) Notwithstanding any other provision of these
Rules, pursuant to G.S. 88-16(4), a cosmetology
candidate, having or other candidates who have
failed either section of the examination five times,
is required to complete an additional 200 hours of
study at an approved cosmetic art school before
another application for re-examination may be
accepted by the Board.

(d) Any candidate for the cosmetology teacher
examination, or manicurist teacher examination,
who fails the examination twice, must meet the
following requirements before taking the
examination again:

(1) Any candidate who failed the practical
portion must request an examination
review, and must complete no less than
200 hours in a teacher training course.

(2) The course of study for that candidate
must be designed to address the
candidate's deficiencies.

(e) Upon written request by any candidate, the
Board shall release a summary of the results of
each category of the practical section of the most
recent examination to the school in which the
candidate is enrolled for the additional study.
pursuant to G.S. 88-16(4) or Paragraph (d) of this

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February 15, 1993

2501

PROPOSED RULES

Rule.

(f) The school in which the student has enrolled
pursuant to G.S. 88-16(4) shall design a course of
studv for that student in order to correct the
student's deficiencies. The course of study must
be submitted to the Board for approval.

(g) A candidate for licensure as an apprentice
cosmetologist who:

1. 1 1 passes the examination with a score of
75 percent or more on both sections;
and

(2) subsequently completes an additional

300 hours within one year of the exami-
nation date may be licensed as a cosme-
tologist under G.S. 88-12 without retak-
ing the examination.

Statutory Authority G.S. 88-10(2); 88-12(2);
88-16; 88-17; 88-21(a)(16); 88-23: 88-30(4).

l\ otice is hereby given in accordance with G.S.
150B-21.2 that the North Carolina Board of
Electrolysis Examiners intends to adopt rules cited
as 21 NCAC 19 .0401 - .0403. .0601.

1 he proposed effective date of this action is May
3, 1993.

1 he public hearing will be conducted at 10:00
a.m. on March 19. 1993 at the North Carolina
Real Estate Commission. 1313 Navaho Drive.
Raleigh. NC 27609.

Reason for Proposed Action:

21 NCAC 19 .0401 - .0403 - It is necessary to set
minimum standards for sanitation, equipment and
supplies in electrolo gists ' offices for the protection
of the public

21 NCAC 19 .0601 - It is necessary for the Board
to inform the public of the Board's curriculum
requirements for approved schools.

Ksomment Procedures: Die record of hearing will
be open for receipt of written comments from
February 15. 1993 through March 19. 1993.
Written comments may cither be submitted at the
hearing or delivered to the Board at its mailing
address (do Patricia Holland. 205 Westview

Place. High Point, NC 27260). Anyone wishing
to speak at the hearing should notify Charlene Bell
in writing at the Board's mailing address no later
than 5:00 p.m. the day before the meeting. Any-
one whose written request to speak is not received
by this deadline will only be able to speak if time
permits.

CHAPTER 19 - BOARD OF
ELECTROLYSIS EXAMINERS

SECTION .0400 - SANITATION,
EQUIPMENT AND SUPPLIES

.040 1 LNEECTION CONTROL STANDARDS

(a) No electrologist or student who has weeping
dermatitis or draining lesions shall participate m
direct client care and care of client-care equipment
until the condition has cleared. Electrologists and
students who have other infectious diseases or
conditions shall follow any applicable control
measures for communicable diseases and condi-
tions set out in L5A NCAC 19A .0200 as adopted
by the Division of Health Services of the Depart-
ment of Human Resources.

(b) No electrologist or student shall work on any
client who has weeping dermatitis or draining
lesions.

(ci All electrologists and students shall wash
hands before beginning work on a client, after
inadvertently touching sores and skin eruptions.
after contact with blood or body fluids containing
visible blood, and before putting on and after
removing gloves. Soaps, detergents, or germicidal
skin preparations shall be used to wash hands.

(d) Each client's skin must be cleaned before
treatment by removing visible soil with soap and
water or a germicidal skin preparation, then
wiping with an antiseptic product applied with
material such as cotton balls.

(ei All electrologists and students shall wear
nonsterile examination gloves during all client-care
procedures. Gloves may not be washed or disin-
fected for reuse: each client shall be treated with
fresh, unused gloves.

(f) All equipment and instruments shall be
cleaned and either sterilized or disinfected |n
accordance with 21 NCAC 19 .0402.

(_gj Any gowns, lab coats or coveralls worn by
electrologists or students must be changed if
contaminated.

(h) Any paper or cotton towels or sheets used to
cover the treatment table and for draping shall be
changed after use by each client and replaced with
fresh, unused or laundered towels or sheets. If

2502

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NORTH CAROLINA REGISTER

February 15, 1993

PROPOSED RULES

gowns are provided for clients, each client shall
receive a fresh, unused paper gown or a freshly
laundered cloth gown.

(i) All electrologists and students shall keep the
workplace area clean and litter-free, including the
treatment table and the surfaces of equipment.

(j) Used disposable needles and other sharp
items must be placed in puncture-resistant contain-
ers for disposal. Such containers shall be kept
easily accessible to the workplace area. Other used
discarded materials (for example, paper towels.

recommended by the Association for
Practitioners in Infection Control.

tissue, cotton balls, Q-tips, gloves) shall be placed
and sealed in a plastic bag for disposal.

(k) Any soiled linen shall be placed in a regular
laundry bag or closed container and kept until jt
can be laundered.

(1) Any staff member who is not an electrologist
or student but who participates in client care or
care of client-care equipment shall comply with
this Rule.

Statutory Authority G.S. 88A-16.

.0402 STERILIZATION AND
DISINFECTION

(a) Equipment and instruments shall be sterilized
or disinfected before use on a client in accordance
with the following schedule:

Category I (Critical): Instruments and

objects that
come into direct
contact with the
blood stream and
other normally
sterile areas of
the body.
Items jn this category must be purchased sterile or
sterilized using an autoclave or dry heat sterilizer.

Category II (Semicritical): Instruments and

objects that
come into direct
contact with
nonmucous
membranes or
skin that is not
intact.

Items in this category shall either be:

( 1 ) purchased sterile or sterilized, using an
autoclave or a dry heat sterilizer, or
chemical sterilization using a method
recommended by the Association for
Practitioners in Infection Control, or

(2) given a physical cleaning followed by
high-level disinfection using a method

Category HI (Noncritical): Instruments and

objects that do
not ordinarily
touch the client
or those that
contact only
intact skin.
Items in this category need not be sterilized but
shall be cleaned with a detergent and hot water or
given low-level disinfection using a method recom-
mended by the Association for Practitioners in
Infection Control.

(b) Autoclaves and dry heat sterilizers shall be
of a type approved by the Federal Food and Drug
Administration.

(d) Glass bead sterilizers may not be used.

(e) Instruments and other items to be sterilized
must be cleaned prior to sterilization. Cleaning
may be done either manually, using water and
detergent, scrubbing with a small brush, and
thoroughly rinsing; or ultrasonically, following the
manufacturer's directions. Items not to be used
immediately following sterilization must be pack-
aged for storage prior to sterilization.

(f) Packaged sterilized items must be either
discarded or, if not disposable, resterilized after
their shelf-life has expired.

(g) Biological indicators must be run on a
monthly basis on autoclaves or dry heat sterilizers
used to sterilize instruments and other items to be
used in electrolysis. A record of the results of
each test and records of any repairs to autoclaves
or dry heat sterilizers must be kept for at least 18
months. Every electrologist and student shall be
responsible for insuring that the requirements of
this Paragraph are followed for each autoclave or
dry heat sterilizer used in sterilizing any instru-
ments or other items used by that person.

Statutory Authority G.S. 88A-I6.

.0403 OFFICES

(a) Each office, wherever located, shall have at
least the following:

(1) treatment table or other piece of furni-
ture for placing clients for treatment:

(2) at least one circuline-type lamp, halo-
gen lamp, or other type or magnifying
lamp;

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NORTH CAROLINA REGISTER

February 15, 1993

2503

PROPOSED RULES

(3) accessible handwashing facilities on the
same floor and accessible toilet facili-
ties in the same building, and both must
have a supply of either soap or a germi- I
cidal skin preparation for washing
hands;

(4) a sup ply of nonsterile examination
gloves, cotton balls and antiseptic prod-
uct for cleaning client's skin, materials
for cleaning instruments and other
items, materials for cleaning the
workplace or documentation of cleaning
contract, paper or cotton towels, and
puncture resistant containers and plastic
bags for used materials;

(5) sterilization equipment and su pplies
needed for the sterilization methods
chosen;

(6) a covered trash can and, if linens are
used, a laundry bag or closed container
for laundry, readily available to each
workplace area; and

(7) storage facilities sufficient to contain
the equipment, instruments and supplies
of the electrolysis practice.

(b) Each office shall be kept clean and orderly,
including all workplace areas , lavatory and water
closet facilities, and all equipment.

Statutory Authority G.S. 88A-16.

SECTION .0600 - SCHOOLS

.0601 CURRICULUM

The course of study for electrolysis shall consist of at least 600 clock hours of instruction in theory and
clinical practice as set out in the following table:

Subject Theory Clinical

Hours Hours

General Orientation 20

Rules of the school
Personal hygiene and dress
Professional ethics and office rules
State and local laws governing electrolysis
History of electrolysis

Trichology (Hair Growth) 20

Hair structure and function
Growth cycles, including regrowth cycles
Follicle structure and function

Endocrinology 20

Causes of hair growth, including new hair stimulation

2504 7:22 NORTH CAROLINA REGISTER February 15, 1993

PROPOSED RULES

Study and function of glands

Dermatology 30

Skin structure and function

Disease of the skin (as related to the practice of electrology)
Reaction of the skin as related to the clinical application of electrolysis

Neurology /Angiology (as related to electrology) 20

Nervous system

Pain thresholds

Pain variables

Synoptic responses
Circulatory system

Cardiovascular system

Lymphatic system

Bacteriology 25 40

Sanitation
Sterilization
Rules and standards promulgated by the Board

Principles of Electricity 20 80

Short wave (Alternating) current
Direct (Galvanic) current

Equipment 30 200

Modalities

Electrolysis (DC - Galvanic)

Thermolysis (SW : Shortwave)

Blend (Combination of Galvanic and Shortwave)
Variables

Probes

Intensity

Timing

Depth of insertion
Equipment maintenance and upkeep

General Treatment Procedure 25 30

Consultation with clients

Consultation instruction shall include methods of

developing case histories and providing information

on hair growth cycles, modalities used, pain factors,

scheduling of appointments, and fees
Positioning and draping

Development of Practice 20 20

Public relations and advertisement
Office procedure and management
Record keeping
Telephone etiquette
Housekeeping (Office')

Totals: 230 370

Statutory' Authority G.S. 88A-19.

7:22 NORTH CAROLINA REGISTER February 15, 1993 2505

PROPOSED RULES

x :< x

%: % ^ sfi ^

;< :< A :* s: x x

Notice is hereby given in accordance with G.S.
150B-21.2 that the North Carolina Board of
Nursing intends to adopt rule cited as 21 NCA C 36
.0226.

1 he proposed effective date of this action is May
3. 1993.

1 he public hearing will be conducted at 4:00
p.m. on March 11. 1993 at the North Carolina
Board of Nursing Office, 3724 National Drive,
Suite 201, Raleigh, North Carolina 27612.

Ixeason for Proposed Action: To define the legal
scope of nurse anesthesia practice and establish
the qualifications which must be met by the regis-
tered nurse who performs these advanced nursing
skills.

Comment Procedures: Any person wishing to
present oral testimony relevant to proposed rules
may register at the door before the hearing begins
and present hearing officer with a written copy of
testimony. Written comments concerning this
adoption must be submitted by March 16, 1993,
to: North Carolina Board of Nursing, P. O. Box
2129, Raleigh, NC 27602, ATTN: Jean H. Stanley,
CPS, APA Coordinator.

CHAPTER 36 - BOARD OF NURSING

SECTION .0200 - LICENSURE

.0226 NURSE ANESTHESIA PRACTICE

(a) Only those registered nurses who meet the
qualifications as outlined in Paragraph (b) of this
Rule may perform nurse anesthesia activities
outlined in Paragraph (el of this Rule.

(b) Qualifications and Definitions:

( 1 J The registered nurse who completes a
program accredited by the Council on
Accreditation of Nurse Anesthesia
Educational Programs, is credentialed
as a certified registered nurse anesthe-

tist by_ the Council on Certification of
Nurse Anesthetists, and who maintains
recertification through the Council on
Recertification of Nurse Anesthetists,
may perform nurse anesthesia activities

ill

13]

in collaboration with a physician, den-
tist, podiatrist, or other lawfully quali-
fied health care provider.
The graduate nurse anesthetist |s a
registered nurse who has completed a
program accredited by the Council on
Accreditation of Nurse Anesthesia
Educational Programs, [s awaiting
initial certification by the Council on
Certification of Nurse Anesthetists and
is listed as such with the Board of
Nursing. The graduate nurse anesthe-

tist may perform nurse anesthesia activ-
ities under the supervision of a certified
registered nurse anesthetist, physician,
dentist, podiatrist, or other lawfully
qualified health care provider provided
that initial certification [s obtained with
18 months after completion of an ac-
credited nurse anesthesia program.
Collaboration is a process by which the
certified registered nurse anesthetist or
graduate nurse anesthetist works with
one or more qualified health care pro-
viders, each contributing his or her
respective area of expertise consistent
with the appropriate occupational licen-
sure laws of ffie State and the estab-
lished policies, procedures, practices
and channels of communication within
the practice setting which lend support
to nurse anesthesia services. The indi-
vidual nurse anesthetist maintains ac-
countability for the outcome of his or
her actions.

(c) Nurse Anesthesia activities and responsibili-
ties which the appropriately qualified registered
nurse anesthetist may safely accept are dependent
upon the individual's knowledge and skills and
other variables in each practice setting as outlined
in 21 NCAC 36 .0224(a). These activities hi;
elude:

( 1 ) Preanesthesia preparation and evalua-
tion of the client to include:

(A) performing a pre-operative health
assessment:

(B) recommending, requesting and evalu-
ating pertinent diagnostic studies; and

(2) Anesthesia induction, maintenance and
emergence of the client to include:

(A) securing, preparing and providing
basic safety checks on all equipment,
monitors, supplies and pharmaceutical

2506

7:22

NORTH CAROLINA REGISTER

February 15, 1993

PROPOSED RULES

agents used for the administration of
anesthesia;

(B) selecting, implementing, and manag-
ing general anesthesia, monitored
anesthesia care, and regional anesthe-
sia modalities, including administering
anesthetic and related pharmaceutical
agents, consistent with the client's
needs and procedural requirements;

(D) providing appropriate perianesthetic
invasive and non-invasive monitoring,
recognizing abnormal findings, imple-
menting corrective action, and re-
questing consultation with appropri-
ately qualified health care providers
as necessary;

(E) managing the client's fluid, blood,
electrolyte and acid-base balance; and

(F) evaluating the client's response during
emergency from anesthesia and imple-
menting pharmaceutical and support-
ive treatment to ensure the adequacy
of client recovery from anesthesia.

(3) Postanesthesia Care of the client to
include:

(A)

ID]

(E)

providing postanesthesia follow-up
care, including evaluating the client's
response to anesthesia, recognizing
potential anesthetic complications,
implementing corrective actions, and
requesting consultation with appropri-
ately qualified health care profession-
als as necessary;

initiating and administering respirato-
ry support to ensure adequate ventila-
tion and oxygenation in the immediate
postanesthesia period;
initiating and administering pharmaco-
logical or fluid support of the cardio-
vascular system during the immediate
postanesthesia period;
documenting all aspects of nurse
anesthesia care and reporting the
client's status, perianesthetic course,
and anticipated problems to an appro-
priately qualified postanesthetic health
care provider who assumes the
client's care following anesthesia
consistent with 21 NCAC 36 .0224(f);
and
releasi ng

as ger established agency policy,
(d) Other clinical activities for which the quali-
fied registered nurse anesthetist may accept respon-
sibility include, but are not limited to:

(1) inserting central vascular access cathe-
ters and epidural catheters;

(2) identifying, responding to and manag-
ing emergency situations, including
initiating and participating in cardio-
pulmonary resuscitation;

(3) providing consultation related to respi-
ratory and ventilatory care and imple-
menting such care according to estab-
lished policies within the practice set-
ting; and

(4) initiating and managing pain relief
therapy utilizing pharmaceutical agents,
regional anesthetic techniques and other
accepted pain relief modalities accord-
ing to established policies and protocols
within the practice setting.

Statutory Authority G.S. 90-171.20(7); 90-
171.42(b).

clients froi

the
postanesthesia care or surgical setting

7:22

NORTH CAROLINA REGISTER

February 15, 1993

2507

LIST OF RULES CODIFIED

1 he List of Rules

Codif

is a listing of rules that were filed with OAH in the month indicated.

Key-

Citation

Title, Chapter, Subchapter and Rule(s)

Adopt

Amend

Repeal

With Chgs

Final text differs from proposed text

Eff. Date

Date rule becomes effective

Temp. Expires

Rule was filed as a temporary rule and expires on this date or 180 days

NORTH CAROLINA ADMINISTRATIVE CODE

DECEMBER 1992

TITLE

DEPARTMENT

TITLE

DEPARTMENT

Agriculture

Economic and Community

Development

10
11

Human Resources
Insurance

15A

Environment, Health
and Natural Resources

Education

Revenue

Occupational Licensing Boards

10 - Chiropractic Examiners

12 - General Contractors

14 - Cosmetic Art Examiners

46 - Pharmacy

Citation

With
Chgs

Eff.
Date

Temp.
Expires

2 NCAC 9L .0524

02/01/93

4 NCAC IK .0103

12/29/92

.0204 - .0207

12/29/92

.0302

12/29/92

10 NCAC 3R .3001

01/04/93

.3020

01/04/93

.3030

01/04/93

.3032

01/04/93

.3040

01/04/93

.3050

01/04/93

14K .0103

01/04/93

.0314 - .0315

01/04/93

2508

7:22

XORTH CAROLINA REGISTER

February 15, 1993

LIST OF RULES CODIFIED

Citation

With
Chgs

Eff.
Date

Temp.
Expires

10 NCAC 140 .0106

01/04/93

14Q .0303

01/04/93

14R .0104 - .0105

01/04/93

18J .0604

01/04/93

18L .0333

01/04/93

.1525

01/04/93

18P .0903

01/04/93

.1003

01/04/93

26H .0103

01/04/93

.0104

01/04/93

.0106

01/04/93

.0303

01/04/93

.0401

01/04/93

.0404

01/04/93

.0509

01/04/93

26N .0101 - .0104

01/04/93

.0301 - .0304

01/04/93

45H .0202

01/04/93

50B .0101

01/04/93

11 NCAC 1 .0108

01/01/93

.0431

01/01/93

6A .0802

01/01/93

11 A .0602

12/29/92

12 .1301 - .1309

12/21/92

180 DAYS

16 .0205

01/01/93

15A NCAC 2D .1002

01/01/93

180 DAYS

2H .0805

12/21/92

4D .0003

01/04/93

7H .0308

12/28/92

13B .0101

01/04/93

.0103

01/04/93

.0201

01/04/93

.0202

01/04/93

7:22

NORTH CAROLINA REGISTER

February 15, 1993

2509

LIST OF RULES CODIFIED

Citation

With
Chgs

Eff.
Date

Temp.
Expires

15A NCAC 13B .0501 - .0502

01/04/93

.0503

01/04/93

.0506 - .0507

01/04/93

.0560

01/04/93

.0562

01/04/93

.0563 - .0564

01/04/93

.0565

01/04/93

.0566

01/04/93

.1202

01/04/93

.1207

01/04/93

14A .0502

01/04/93

.0512

01/04/93

14C .0001

01/04/93

.0002

01/04/93

.0003 - .0004

01/04/93

.0005

01/04/93

.0006 - .0009

01/04/93

16A .0402 - .0412

01/04/93

19 A .0401

01/04/93

.0404

01/04/93

.0502

01/04/93

.0503

01/04/93

19B .0503

01/04/93

21F .0801

01/04/93

.0802

01/04/93

.0803

01/04/93

.0804

01/04/93

16 NCAC 1A .0001

01/01/93

6D .0103

01/01/93

17 NCAC 6B .0613

01/01/93

21 NCAC 10 .0205

01/01/93

12 .0901

01/04/93

.0902

01/04/93

2510

7:22

NORTH CAROLINA REGISTER

February 15, 1993

LIST OF RULES CODIFIED

Citation

With
Chgs

Eff.
Date

Temp.
Expires

21 NCAC 12 .0903 - .0904

01/04/93

.0905 - .0906

01/04/93

.0907 - .0908

01/04/93

.0909

01/04/93

.0911 - .0912

01/04/93

14L .0301 - .0302

01/01/93

46 .2504

01/04/93

7:22

NORTH CAROLINA REGISTER

February 15, 1993

2511

RRC OBJECTIONS

1 he Rules Review Commission (RRC) objected to the following rules in accordance with G.S.
143B-30.2(c). State agencies are required to respond to RRC as provided in G.S. 143B-30.2(d).

COMMERCE
Banking Commission

4 NCAC 3F .0402 - Required and Permissible Investments
Departmental Rules

4 NCAC IK .0103 - Eligible Applicants
Agency Revised Rule

4 NCAC IK .0204 - Discretionary Public Hearing by the Department
Agency Revised Rule

4 NCAC IK .0205 - Formal Application Procedures: Approval
Agency Revised Rule

4 NCAC IK .0206 - Formal Application Procedures: Denial
Agency Revised Rule

4 NCAC IK .0207 - Reimbursement of Extraordinary Expense
Agency Revised Rule

4 NCAC IK .0302 - Criteria for Making Necessary Findings-
Agency Revised Rule

ENVIRONMENT, HEALTH, AND NATURAL RESOURCES

Coastal Management

ISA NCAC 7H .0308 - Specific Use Standards for Ocean Hazard Areas-
Rule Returned to Agency

Environmental Management

15A NCAC 2H .0805 - Certification and Renewal of Certification
Agency Revised Rule
Rule Returned to Agency-
Agency Filed with OAH

Governor's Waste Management Board

15 A NCAC 14C .0005 - Conditions for Grants
Agency Revised Rule

Solid Waste Management

15 A NCAC 13B .0103 - General Conditions
Agency Revised Rule

Wildlife Resources and Water Safety

RRC Objection 01/21/93

RRC Objection
Obj. Removed
RRC Objection
Obj. Removed
RRC Objection
Obj. Removed
RRC Objection
Obj. Removed
RRC Objection
Obj. Removed
RRC Objection
Obj. Removed

11/19/92
12/17/92
11/19/92
12/17/92
11/19/92
12/17/92
11/19/92
12/17/92
11/19/92
12/17/92
11/19/92
12/17/92

RRC Objection 11/19/92

12/17/92

RRC Objection 01/21/93

RRC Objection 10/15/92

11/19/92

Eff. 12/21/92

RR C Objection 12/1 7/92
Obj. Removed 12/17/92

RRC Objection 12/17/92
Obj. Removed 12/17/92

2511

7:22

XORTH CAROLINA REGISTER

February 15, 1993

RRC OBJECTIONS

15A NCAC 101 .0001 - Definitions
Agency Responded
Agency Responded

HUMAN RESOURCES

Medical Assistance

10 NCAC 26D .0012 - Time Limitation

Agency Withdrew Rule
10 NCAC 26N .0201 - Offer to Counsel
Agency Withdrew Rule

Mental Health: General

10 NCAC 14K .0103 - Definitions
Agency Revised Rule

INDEPENDENT AGENCIES

RRC Objection 10/15/92
No Action 11/19/92

No Action 12/17/92

RR C Ojbection 1 2/1 7/92
12/17/92

RRC Objection 12/17/92
12/17/92

RRC Objection
Obj. Removed

12/17/92
12/17/92

■

N.C. Housing Finance Agency

24 NCAC 1M .0202 - Eligibility

No Response from Agency

No Response from Agency
24 NCAC 1M .0204 - Selection Procedures

No Response from Agency

No Response from Agency
24 NCAC 1M .0205 - Administration

No Response from Agency

No Response from Agency
24 NCAC 1M .0206 - Program Fees

No Response from Agency

No Response from Agency
24 NCAC 1M .0301 - Goal and Objectives

No Response from Agency

No Response from Agency
24 NCAC 1M .0302 - Eligibility Requirements-
No Response from Agency

No Response from Agency
24 NCAC 1M .0303 - Threshold Review Criteria

No Response from Agency

No Response from Agency
24 NCAC 1M .0306 - Funding Commitment

No Response from Agency

No Response from Agency
24 NCAC 1M .0401 - Goals and Objectives

No Response from Agency

No Response from Agency
24 NCAC 1M .0402 - Eligibility Requirements-
No Response from Agency

No Response from Agency
24 NCAC 1M .0403 - Ttireshold Review Criteria

No Response from Agency-
No Response from Agency

RRC Objection
No Action
No Action
RRC Objection
No Action
No Action
RRC Objection
No Action
No Action
RRC Objection
No Action
No Action
RRC Objection
No Action
No Action
RRC Objection
No Action
No Action
RRC Objection
No Action
No Action
RRC Objection
No Action
No Action
RRC Objection
No Action
No Action
RRC Objection
No Action
No Action
RRC Objection
No Action
No Action

10/15/92
11/19/92
12/17/92
10/15/92
11/19/92
12/17/92
10/15/92
11/19/92
12/17/92
10/15/92
11/19/92
12/17/92
10/15/92
11/19/92
12/17/92
10/15/92
11/19/92
12/17/92
10/15/92
11/19/92
12/17/92
10/15/92
11/19/92
12/17/92
10/15/92
11/19/92
12/17/92
10/15/92
11/19/92
12/17/92
10/15/92
11/19/92
12/17/92

7:22

NORTH CAROLINA REGISTER

February 15, 1993

2513

RRC OBJECTIONS

24 NCAC 1M .0404 - Ranking Criteria

No Response from Agency

No Response from Agency
24 NCAC 1M .0405 - Agency Board Approval

No Response from Agency

INSURANCE

Agent Services Division

1 1 NCA C 6A . 0802 - Licensee Requirements
Agency Revised Rule

Departmental Rules

11 NCAC 1 .0432 - Manufactured Housing Board Hearings
Agency Withdrew Rule

Financial Evaluation Division

11 NCAC 11 A .0602 - Licensure
Agency Revised Rule
Rule Returned to Agency

Multiple Employer Welfare Arrangements

11 NCAC 18 .0019 - Description of Forms

Seniors' Health Insurance Information Program

11 NCAC 17 .0005 - SH11P Inquiries to Insurers and Agents

LICENSING BOARDS AND COMMISSIONS

Cosmetic Art Examiners

21 NCAC 14L .0301 - Applicants Licensed as Teachers in Other States

Agency Revised Rule
21 XCAC 14L .0302 - Requirements for Obtaining a Teacher's License

Agency Revised Rule

General Contractors

21 NCAC 12 .0901 - Definitions

Agency Revised Rule
21 NCAC 12 .0908 - Order Directing Payment from Fund

Agency Revised Rule
21 NCAC 12 .0910 - Limitations; Pro Rata Distribution

REVENUE

Individual Income. Inheritance and Gift Tax Division
17 NCAC 3B .0401 - Penalties

RRC Objection 10/15/92

No Action 11/19/92

No Action 12/17/92

RRC Objection 10/15/92

No Action 11/19/92

No Action 12/17/92

RRC Objection 12/17/92
Obj. Removed 12/17/92

RRC Objection 12/17/92
12/17/92

RRC Objection 11/19/92

RR C Objection 1 1 11 9192

12/17/92

RRC Objection 06/18/92

RR C Objection 1 1 II 9/92

Obj. Removed 12/17/92

RRC Objection 11/19/92

Obj. Removed 12/17/92

RRC Objection 12/17/92

Obj. Removed 12/17 '92

RR C Objection 12/1 7/92

Obj. Removed 12/17/92

RRC Objection 12/1 7 '92

RRC Objection 08/20/92

2514

7:22

NORTH CAROLINA REGISTER

February 15, 1993

RRC OBJECTIONS

1 7 NCA C 3B . 0402 - Interest

Individual Income Tax Division

17 NCA C 6B .0107 - Extensions

17 NCAC 6B .0115 - Additions to Federal Taxable Income

17 NCAC 6B .01 16 - Deductions from Federal Taxable Income

17 NCAC 6B .0117 - Transitional Adjustments

1 7 NCA C 6B . 3406 - Refunds

RRC Objection 08/20/92

RRC Objection
RRC Objection
RRC Objection
RRC Objection
RRC Objection

08/20/92
08/20/92
08/20/92
08/20/92
08/20/92

7:22

NORTH CAROLINA REGISTER

February 15, 1993

2515

RULES INVALIDATED BY JUDICIAL DECISION

1 his Section of the Register lists the recent decisions issued by the North Carolina Supreme Court,
Court of Appeals . Superior Court (when available), and the Office of Administrative Hearings which
invalidate a rule in the North Carolina Administrative Code.

1 NCAC 5 A .0010 - ADMINISTRATIVE PROCEDURES

Thomas R. West. Administrative Law Judge with the Office of Administrative Hearings, declared two portions
of Rule 1 NCAC 5A .0010 void as applied in Stauffer Information Systems. Petitioner v. The North Carolina
Department of Community Colleges and Die North Carolina Department of Administration, Respondent and
The University of Southern California, lntervenor-Respondent (92 DOA 0666).

15A NCAC 30 .0201(a)(1)(A) - STDS FOR SHELLFISH BOTTOM & WATER COLUMN LEASES

Julian Mann III, Chief Administrative Law Judge with the Office of Administrative Hearings, declared Rule
15A NCAC 30 .0201(a)(1)(A) void as applied in William R. Willis, Petitioner v. North Carolina Division of
Marine Fisheries. Respondent (92 EHR 0820).

15A NCAC 19A .0202(d) (10) - CONTROL MEASURES - HIV

Brenda B. Becton, Administrative Law Judge with the Office of Administrative Hearings, declared Rule 15A
NCAC 19A .0202(d)( 10) void as applied in ACT-UP TRIANGLE (AIDS Coalition to Unleash Power Triangle),
Steven Harris, and John Doe, Petitioners v. Commission for Health Services of the State of North Carolina,
Ron Levine, as Assistant Secretary of Health and State Health Director for the Department of Environment,
Health, and Natural Resources of the State of North Carolina. William Cobey, as Secretary of the Department
of Environment , Health, and Natural Resources of the State of North Carolina, Dr. Rebecca Meriwether, as
Chief, Communicable Disease Control Section of the North Carolina Department of Environment , Health, and
Natural Resources. Wayne Babbitt Jr. . as Chief of the HIV/STD Control Branch of the North Carolina
Department of Environment, Health, and Natural Resources. Respondents (91 EHR 0818).

2516 7:22 NORTH CAROLINA REGISTER February 15, 1993

CONTESTED CASE DECISIONS

1 his Section contains the full text of some of the more significant Administrative Law Judge decisions
along with an index to all recent contested cases decisions which are filed under North Carolina 's
Administrative Procedure Act. Copies of the decisions listed in the index and not published are available
upon request for a minimal charge by contacting the Office of Administrative Hearings, (919) 733-2698.

KEY TO CASE CODES

ABC Alcoholic Beverage Control Commission DST

BDA Board of Dental Examiners EDC

BME Board of Medical Examiners EHR

BMS Board of Mortuary Science

BOG Board of Geologists ESC

BON Board of Nursing HAF

BOO Board of Opticians HRC

CFA Commission for Auctioneers IND

COM Department of Economic and Community INS

Development LBC

CPS Department of Crime Control and Public Safety MLK

CSE Child Support Enforcement NHA

DAG Department of Agriculture OAH

DCC Department of Community Colleges OSP

DCR Department of Cultural Resources PHC

DCS Distribution Child Support

DHR Department of Human Resources POD

DOA Department of Administration SOS

DOJ Department of Justice SPA

DOL Department of Labor

DSA Department of State Auditor WRC

Department of State Treasurer
Department of Public Instruction
Department of Environment, Health, and
Natural Resources
Employment Security Commission
Hearing Aid Dealers and Fitters Board
Human Relations Committee
Independent Agencies
Department of Insurance
Licensing Board for Contractors
Milk Commission

Board of Nursing Home Administrators
Office of Administrative Hearings
Office of State Personnel
Board of Plumbing and Heating
Contractors

Board of Podiatry Examiners
Department of Secretary of State
Board of Examiners of Speech and Language
Pathologists and Audiologists
Wildlife Resources Commission

CASE NAME

CASE
NUMBER

ALJ

FILED
DATE

Raymond E. Dresser Jr.

DHR, Division of Social Services, CSE

91 CSE 0960

Nesnow

01/27/93

Wilma K. Hanton

University of North Carolina at Chapel Hill

91 OSP 1106

Morgan

01/19/93

Deerwood Health & Fitness Center, Bill J. Mayes

EHR, Transylvania County Health Department

92 EHR 0016

Morgan

01/28/93

Mid South Water Systems, Inc.
v.

Department of Environment, Health, & Natural Resources

92 EHR 0336

Reilly

01/20/93

Harriss & Moore, Inc.

County of Forsyth, Environmental Affairs Dept.

92 EHR 0383

Becton

01/29/93

7:22

NORTH CAROLINA REGISTER

February 15, 1993

2517

CONTESTED CASE DECISIONS

CASE NAME

CASE
NUMBER

ALJ

FILED
DATE

Sanford Finishing Company

EHR, Division of Environmental Management

92 EHR 0550

West

01/19/93

William M. Barwick
v.

EHR, Division of Coastal Management

92 EHR 0607

Chess

01/21/93

Ronnie R. Bailey. Bailey's Convenient Mart

Alcoholic Beverage Control Commission

92 ABC 0715

Morgan

01,13,93

Gourmet Cafe. Inc.
v.

Department of Environment. Health. & Natural Resources

92 EHR 0727

Mann

01/13/93

Lilah Faye Hinton

Durham County Department of Social Services

92 OSP 0730

Morgan

01/22/93

Ralph Stamey

Department of Correction

92 OSP 0745
92 OSP 0893

Morrison

01/28/93

Carolina Medieorp. Inc.. et al. Cleveland Memorial
Hospital. Inc., et al. Moore Regional Hospital, et al

Bd of Trustees of the Teachers" & St Emp Comprehensive

Major Medical Plan & David G. Devries

92 INS 0747
92 INS 0825
92 INS 0880

Reilly

01/29/93

Steven R. Swint

Pembroke State University

92 OSP 0768

Nesnow

01/21/93

Henry L. Grady

Department of Human Resources. Caswell Center

92 OSP 0808

Mann

01/22/93

Lillian Lennon

Durham County Department of Social Services

92 OSP 0819

Morgan

01/22/93

Southchem. Inc.

EHR. Solid Waste Management Division

92 EHR 0925

Chess

12/31/92

Ruth C. Walker

Rockingham County Board of Health

92 OSP 0957

Morgan

01 25/93

Stella Pitt

DHR. Divison of Facility Services

92 DHR 1030

Nesnow

01/21/93

2518

7:22

NORTH CAROLINA REGISTER

February 15. 1993

CONTESTED CASE DECISIONS

CASE NAME

CASE
NUMBER

ALJ

FILED
DATE

Michael S. Hart

v.
Bd/Trustees//NC Local Governmental Emp Retirement Sys

92 DST 1040

Gray

01/26/93

Franklin Delno Slade, t/a Slade & Son Grocery Store

v.
Alcoholic Beverage Control Commission

92 ABC 1046

Nesnow

01/27/93

John P. Kavanagh

Department of Correction

92 OSP 1094

Chess

01/06/93

Charles R. Brown

Wake County Health Department

92 EHR 1172

Reilly

01/20/93

Department of Environment, Health, & Natural Resources

v.
Griffin's Quick Lunch, Hubert Saunders Brown, Owner

92 EHR 1223

Reilly

01/20/93

DHR, Div of Facility Services, Child Day Care Section

Margaret Sellers

92 DHR 1307

Gray

01/20/93

Department of Environment, Health, & Natural Resources

Jessnick Foods, Inc., d/b/a Dunkin Donuts,

Phillip Grant, Owner

92 EHR 1552

Reilly

01/20/93

7:22

NORTH CAROLINA REGISTER

February 15, 1993

2519

CONTESTED CASE DECISIONS

STATE OF NORTH CAROLINA

COUNTY OF LEE

IN THE OFFICE OF
ADIVnNISTRATTVE HEARINGS
92 EHR 0550

SANFORD FINISHING COMPANY,

Petitioner,

N.C. DEPARTMENT OF ENVIRONMENT,
HEALTH, AND NATURAL RESOURCES,
DIVISION OF ENVIRONMENTAL MANAGEMENT.
Respondent.

RECOMMENDED DECISION

This contested case was heard on December 4, 1992, in Raleigh, North Carolina before
Administrative Law Judge, Thomas R. West. The case was tried on stipulated facts and exhibits. The
stipulations are contained in a document entitled "Stipulations of Facts" filed on December 3, 1992. The
"Stipulation of Facts" is incorporated into this Recommended Decision.

APPEARANCES

Petitioner is represented by Grady L. Shields of the law firm of Wyrick, Robbins, Yates and Ponton.

Respondent is represented by Special Deputy Attorney General, Philip A. Telfer.

ISSUES

Is Petitioner eligible for reimbursement of costs associated with a clean-up of a petroleum leak from
its commercial underground storage tanks when annual operating fees were past due and payable at the time
the release was discovered and not paid until after the clean-up was complete.

OFFICIAL NOTICE

Official notice is taken of:

1 . Chapter 143, Article 21A. Part 2A N.C. General Statutes (G.S. 143-215. 94A-143-215.94M)

2. Chapter 1035. Session Laws - 1988

3. Chapter 652. Session Laws - 1989

4. Chapter 538. Session Laws - 1991

BURDEN OF PROOF

The burden of proof is on Petitioner to show, by the greater weight of the substantial evidence, that
Respondent agency prejudiced Petitioner's rights and acted in one of the five ways enumerated in G.S. 150B-

2520

7:22

NORTH CAROLINA REGISTER

Eebruary 15, 1993

CONTESTED CASE DECISIONS

23(a) by refusing to reimburse Petitioner for clean-up costs associated with the petroleum release.

STATEMENT OF THE CASE

The Statement of the Case contains statements of fact found from the exhibits stipulated by the parties
as well as a restatement of certain stipulated facts.

In February 1991, Petitioner, Sanford Finishing Company (hereafter "Sanford") hired an
environmental consulting firm from Massachusetts to perform an environmental site assessment at its textile
plant in Sanford. On approximately February 15, 1991, the consultant found a petroleum leak from an
underground storage tank. Sanford reported the leaks to Respondent (hereafter "DEM") on March 12, 1991 .
G.S. 143-215. 94E requires immediate notification.

In May of 1991, Sanford hired another environmental consulting firm, Edgerton Environmental
Services, Inc. of Morrisville, North Carolina, to perform a site assessment. Edgerton found that two
underground storage tanks (18,500 gal. and 20,000 gal.) had leaked #5 Fuel Oil and that, as a result, soils
and groundwater had been contaminated.

Pursuant to the first assessment, Sanford had decided on February 15, 1991 not to use the two tanks
in the future and on June 1, 1991, took the tanks out of operation. On July 8, 1991, Edgerton removed the
underground storage tanks.

Between June and September 1991, Edgerton also removed 393 tons of soil that were contaminated
to a surficial depth over an area of approximately one-half acre.

On August 14, 1991 , DEM solicited payment of the annual tank operating fees for tanks on Sanford's
property. The fees were due for the year 1989, when Part 2 A became effective, through 1991 . DEM knew
about Sanford's tanks only because Sanford had filed the Notice of Intent to remove the two leaking tanks with
DEM on May 29, 1991. Sanford paid the operating fee for the three years on August 30, 1991. DEM
accepted the payment.

Subsequently, on March 13, 1992, some six months after cleaning up Sanford's site and some seven
months after Sanford paid all past due operating fees, Edgerton applied on Sanford's behalf for reimbursement
of the clean-up costs. The total cost of the clean-up was $76,720.44. The deductible is $50,000.00.
Therefore, the sum at issue in this case is $26,720.44.

On March 18, 1992, DEM denied the request for reimbursement. DEM cited G.S. 143-215. 94E(g)
and stated that:

"Based on available information, you had not registered your tanks or paid any fees until August of
1991, whereas, evidence of the release was discovered in February or March of 1991. Because the
annual operating fees for 1989, 1990 and 1991 due pursuant to G.S. 143-21 5. 94C had not been paid
at the time release was discovered, the Department is required to deny your request for reimburse-
ment from the Commercial underground Storage Tank Clean-up Fund."

In October 1991, DEM published a document entitled "Answer to Common Trust Fund Questions."
Among the questions is #10:

"Can an owner or operator register the tanks and pay annual operating fees that are past due?"

DEM answers the question:

7:22 NORTH CAROLINA REGISTER February 15, 1993 2521

CONTESTED CASE DECISIONS

"Yes. If all fees have been paid prior to the leak discovery, the clean-up is potentially eligible for
trust fund reimbursement. If a release is discovered and there are outstanding fees, the cleanup will not be
eligible for trust fund reimbursement. It is fraud to delay reporting the leak so you can pay outstanding fees.
DEM will take appropriate legal action against fraud."

On July 3, 1991, the General Assembly ratified Chapter 538 of the 1991 Session Laws. Section 4
of Chapter 538 amended G.S. 143-215. 94C by adding subsection (e). Subsection (e) provides that an owner
of a commercial underground storage tank who fails to pay a tank fee within thirty days of the day it is due
shall pay a late fee of $5.00 per day up to a maximum equal to the tank fee due. Subsection (e) became
effective on January 1, 1992 and was not effective at any of the dates relevant to this case.

No administrative rules have been promulgated to implement Part 2A, Article 21 A of Chapter 143.
Rules are in the process of being promulgated. Draft rules were published in the North Carolina Register on
June 15, 1992. G.S. 143-215. 94L empowers DEM to promulgate rules to implement Article 21 A.

ARGUMENTS

Sanford argues that G.S. 143-215. 94E(g)(3) does not bar it from reimbursement because Sanford had
not failed to pay an operating fee when it made its application for Fund reimbursement. Sanford also argues
that DEM's policy of denying reimbursement if fees are past due and not paid at the time a release is
discovered is the adoption of a rule without following the requirements of Chapter 150B of the General
Statutes.

DEM argues that the General Assembly's intent would be vitiated if Sanford could obtain
reimbursement by paying fees after discovering a release. DEM replies to Sanford's second argument that
it is not required to promulgate rules to enforce statutes which the General Assembly has, by that same statute,
empowered it to enforce.

ANALYSIS

Sanford cannot be reimbursed from the Commercial Leaking Underground Storage Tank Clean-up
Fund ("Fund").

The clear, unequivocal language of G.S. 143-215. 94E(g)(3) would appear to not only prevent DEM
from reimbursing Sanford in the first place but require DEM to seek reimbursement from Sanford if DEM
had reimbursed Sanford for the clean-up. The problem Sanford seems to have with this obvious and simple
answer to the parties' dispute is that DEM has, by policy, not followed the clear, unequivocal language of
G.S. 143-215. 94E(g)(3).

DEM has published an interpretation of the statute stating that it can reimburse owners or operators
who have failed to pay an annual tank fee due pursuant to G.S. 143-21 5. 94C if the fee is paid prior to the
discovery of a leak and no fraud is involved. Sanford argues that this interpretation is the promulgation by
DEM of a rule, as defined by G.S. 150B-2(8a), without DEM having followed the procedures for rulemaking
in Article 2 of Chapter 150B.

Sanford's argument has merit. A "rule" is a statement of general applicability that interprets an
enactment of the General Assembly. G.S. 150B-2(8a) . DEM's published statement that owners can be
reimbursed when they make late payments to the Fund prior to discovering a leak and denying reimbursement
to owners when they make late payments to the fund after a leak is discovered is a statement of general
applicability that interprets the statute and is a classic example of rulemaking.

DEM argues that it is not required to promulgate rules to enforce Part 2A. Article 21 A, Chapter 143

2522 7:22 NORTH CAROLINA REGISTER February 15, 1993

CONTESTED CASE DECISIONS

of the General Statutes. DEM is correct. The Part empowers DEM to control and direct the fund. DEM
is empowered by the Part to promulgate rules, but rules are not necessary when a statute itself empowers an
agency.

DEM creates a Catch 22 for itself, however. It argues that it is not necessary to promulgate rules
to interpret G.S. 143-215. 94E to prevent reimbursement to Sanford, because the statute is clear and
unequivocal, yet then published an interpretation of that same clear and unequivocal statute that would permit
reimbursement if late payment were made prior to discovery of a leak and deny reimbursement if late payment
were made after discovery of a leak.

G.S. 143-215. 94E(g)(3) does not make such a distinction. DEM interprets the statute to create a
distinction between the two situations. DEM has made a statement of general applicability that interprets an
enactment of the General Assembly. DEM has promulgated an administrative rule without substantially
complying with Article 2A of Chapter 150B. As a result, DEM's "rule" is void.

At this point in our analysis, we are left with a statutory scheme that must be interpreted to determine
whether DEM must reimburse Sanford. It is at this point that the rules of statutory construction argued by
DEM become relevant. When DEM published a statement of general applicability that interpreted G.S. 143-
215.94E(g)(3), it promulgated a rule. When this Administrative Law Judge interprets the statute, it is pursuant
to the rules of statutory construction.

If G.S. 143-215. 94E is read strictly and literally, no reimbursement is due Sanford. "No
owner... shall be reimbursed... if the owner... has failed to pay an annual tank fee due pursuant to G.S. 143-
215.94C." G.S. 143-215. 94E(g)(3) . Sanford failed to pay its 1989 fees on or before January 1, 1989 and
its 1990 fees pursuant to a staggered schedule. Therefore, Sanford did not comply with G.S. 143-215. 94C
and would not be entitled to reimbursement.

If a strict, literal interpretation of a statute contravenes the purpose manifested by the Legislature, the
reason and purpose of the law should control. In re Hardy , 294 N.C. 90, 240 S.E.2d 367(1978). A
construction which will defeat or impair the object of the statute must be avoided if it can reasonably be done
without violence to the legislative language. Ick

DEM correctly argues in its brief that the intent of the General Assembly in enacting Part 2A was
to protect the environment by helping to finance expensive ground water clean-ups with a compulsory
insurance fund financed by the General Fund and tank fees. This purpose is made manifest by the statutes
themselves. DEM correctly argues that the fund cannot be successful if fees are paid only after the injury is
discovered. "If each claimant [were] allowed the luxury of waiting to see if the fund is needed prior to paying
its fees, it would not take long for the regulated community to 'beat the system". Those who timely paid fees
and had no release would be inequitably treated under such an application of the statutes." See "Respondent's
Memorandum of Law" pp. 2-3.

CONCLUSIONS OF LAW

The result is that DEM did not err by refusing to reimburse Sanford. G.S. 143-215. 94E(g)(3) does
not empower DEM to reimburse Sanford. The statute prohibits DEM from reimbursing Sanford.

DEM is empowered to enforce Part 2A, Article 21A, Chapter 143 of the General Statutes and in
doing so, is empowered to interpret the statute. But, when DEM publishes statements of general applicability
that interpret the Part, DEM has promulgated a "rule" and must substantially comply with Article 2A of
Chapter 150B. That failure, in this case, is immaterial to Sanford. Sanford's rights were not prejudiced
because it had no right to reimbursement. Acceptance by DEM of the fee paid by Sanford is immaterial
because the fee is compulsory. Sanford is charged with knowing the law. The failure of its consultant to

7:22 NORTH CAROLINA REGISTER February 15, 1993 2523

CONTESTED CASE DECISIONS

register Sanford's tanks does not insulate Sanford from its duty to do so and the consequences of failing to
register the tanks and pay the fee. DEM had no duty to impart actual knowledge to Sanford of the
requirements of the law.

RECOMMENDED DECISION

The decision by DEM to deny reimbursement to Sanford for the clean-up of its commercial, leaking,
underground storage tanks should be affirmed.

ORDER

It is hereby ordered that the agency serve a copy of the final decision on the Office of Administrative
Hearings, P.O. Drawer 27447, Raleigh, N.C. 2761 1-7447, in accordance with North Carolina General Statute
l50B-36(b).

NOTICE

The agency making the final decision in this contested case is required to give each party an
opportunity to file exceptions and proposed findings of fact and to present written arguments to the agency.
G.S. 150B-40(e).

A copy of the final agency decision or order shall be served upon each party personally or by certified
mail addressed to the party at the latest address given by the party to the agency and a copy shall be furnished
to his attorney of record. G.S. 150B-42(a).

The agency that will make the final decision in this contested case is the Secretary of North Carolina
Department of Environment. Health, and Natural Resources.

This the 19th day of January, 1993.

Thomas R. West
Administrative Law Judge

2524 7:22 NORTH CAROLINA REGISTER February 15, 1993

CONTESTED CASE DECISIONS

STATE OF NORTH CAROLINA

COUNTY OF CARTERET

IN THE OFFICE OF
ADMINISTRATIVE HEARINGS

92 EHR 0727

GOURMET CAFE, CMC.

Petitioner,

N.C. DEPARTMENT OF ENVIRONMENT,
HEALTH, AND NATURAL RESOURCES,
Respondent.

RECOMMENDED DECISION

This contested case was decided by Judge Julian Mann III. based upon stipulated facts and exhibits,
as set out below, and filed with the Office of Administrative Hearings on December 11, 1992. These
stipulations were filed pursuant to G.S. 150B-31 and 26 NCAC 3 .0006.

APPEARANCES

For Petitioner:

Mrs. Jean Lewis, pro se

President. Gourmet Cafe, Inc.

4050 Arendell Street

Morehead City, North Carolina 28557

Petitioner

For Respondent:

John P. Barkley

Associate Attorney General

North Carolina Department of Justice

P.O. Box 629

Raleigh. North Carolina 27602-0629

Attorney for Respondent

This contested case was referred to Judge Dolores O. Nesnow for a settlement conference. Although
a settlement was not produced, the parties agreed to submit their controversy based upon stipulated facts.

ISSUES

1. Whether Respondent may properly suspend Petitioner's food and lodging permit for failure
to pay the $25.00 late fee required by G.S. 130A-248(d)?

2. Whether the Petitioner is subject to the $25.00 late fee for failure to pay the $25.00 annual
food and lodging fee?

EXHIBITS

Exhibit A Petitioner's single entry cash journal

Exhibit B Petitioner's bank statement for April 1992

Exhibit C Petitioner's invoice from DEHNR for fee

7:22

NORTH CAROLINA REGISTER

February 15, 1993

2525

CONTESTED CASE DECISIONS

Exhibit D Respondent's Notice of Intent to Suspend

Exhibit E Respondent's inventory record of payments for Gourmet Cafe, Inc.

STIPULATIONS

The parties entered into the following Stipulations:
"I. Procedural Matters

1 . The parties agree and stipulate that all parties are properly before the Office of
Administrative Hearings, which has jurisdiction over the parties and the subject matter of this proceeding.

2. The parties agree and stipulate to have this matter determined on the basis of
Stipulated Facts, including documentary evidence, and statements of position, that CALJ Mann will use to
determine Conclusions of Law and a Recommendation as part of his Recommended Decision. The parties
agree and stipulate that the Stipulated Facts and documentary evidence presented in this document represent
the testimony and evidence that would be presented by each party as part of a contested case hearing, and that
the stipulations are to introduction of the evidence and not to the positions asserted by the parties.

3. The parties agree and stipulate that no contested case hearing will be held in this
matter and the Recommended Decision will be made as described in paragraph 2 above.

II. Stipulated Facts

In addition to the other stipulations contained herein, the parties agree and stipulate to the introduction
of the following facts:

Petitioner's Facts

1. Gourmet Cafe, Inc. bookkeeping is done by hand in-house.

2. A combination single entry cash journal and check register is used for record keeping.

3. Check number, date written and payee are listed on this journal.

4. On the date, April 23, 1992, checks numbered 4643 to 4647 were written. Three
of these five checks were for State fees to be mailed to Raleigh. Check number 4646 was written to DEHNR
for $25.00 for the Health Department fee. A copy of my journal showing these check numbers is enclosed.

5. There is no mailbox convenient to the cafe, so it is my custom and practice to drive
to the Post Office to mail letters.

6. In this particular case, I had to drive to the bank first to exchange check number 4643
for a cashier's check to mail to the ABC Board, as they require. On the way back to the cafe from the bank,
all three envelopes going to Raleigh were mailed at the Post Office.

7. The ABC Board issued my Liquor License and I had it back in the cafe by April 30,
1992. The NC Department of Revenue also issued my Beer and Wine License on April 30th.

8. My bank statement dated 4/30/92 (copy enclosed) shows check number 4643 (the
ABC Board) cleared the bank on 4/24. That is because it was after 2:00 on 4/23 that I drove to the bank to
get the cashier's check as noted in Item 6. Check number 4645 (NC Dept. of Revenue) cleared my bank on

2526 7:22 NORTH CAROLINA REGISTER Februarx IS, 1993

CONTESTED CASE DECISIONS

4/30. All of this was completed prior to the May date given as the late date for the DEHNR fee. Check
number 4646 to DEHNR is still outstanding on my bank statement. A copy of the check stub and my half
of the statement with my notations of payment are enclosed.

9. See attached Petitioner's Exhibits A, B & C.

Respondent's Facts

1. Pursuant to G.S. 130A-248(d), the Environmental Health Services Section billed
Gourmet Cafe, Inc., a duly permitted facility, on March 25, 1992 for the statutory annual food and lodging
fee of $25.00 for the fiscal year ending June 30, 1992. The Environmental Health Services Section did not
receive payment within the statutory 45 day payment period. A second invoice was mailed on May 9, 1992,
for the statutory annual fee of $25.00, plus the additional $25.00 late payment fee authorized by the statute.

2. Notice of Intent to Suspend was issued and mailed by certified mail to Gourmet Cafe,
Inc. on June 5, 1992, for failure to pay the $25.00 annual fee and the $25.00 late payment fee. A true and
accurate copy of the Notice is attached hereto.

3. On August 18, 1992, Ms. Elizabeth Fuller called the ABC Commission to determine
if a check for the Food and Lodging fee had been inadvertently forwarded to that agency with the checks for
Mrs. Lewis's ABC fees. The ABC Commission did not have the check for the Food and Lodging fee and
stated that the ABC Commission could not deposit a check made out to another agency.

4. The Department bills 21 ,296 facilities for the Food and Lodging fee. In Fiscal year
1991-92, 2,140 of those facilities have been required to pay a late fee of $25.00. Approximately five
percent, or approximately 107 facilities, have claimed that the money for the food and Lodging fee had been
mailed prior to the deadline for the late fee. All of these facilities have been required to pay the late fee.

5. See attached Respondent's Exhibits D & E."

Based upon the foregoing Stipulations, documentary evidence and pleadings contained in the file, the
undersigned makes the following:

FINDINGS OF FACT

1 . The Office of Administrative Hearings has jurisdiction over the parties and the subject matter
of this contested case pursuant to Chapters 130A and 150B of the North Carolina General Statutes.

2. Gourmet Cafe, Inc. bookkeeping is done by hand in-house. (Exhibit A)

3. A combination single entry cash journal and check register is used for record keeping.
(Exhibit A)

4. Check number, date written and payee are listed on this journal. (Exhibit A)

5. On April 23, 1992, checks numbered 4643 to 4647 were written. Three of these five checks
were for State fees to be mailed to Raleigh. Check number 4646 was written to DEHNR for $25.00 for the
Health Department fee. (Exhibits A and B)

6. There is no mailbox convenient to the cafe, so it is the Petitioner's custom and practice to
drive to the Post Office to mail letters. (April 23, 1992)

7:22 NORTH CAROLINA REGISTER February 15, 1993 2527

CONTESTED CASE DECISIONS

7. In this particular case, Petitioner drove to the bank first to exchange check number 4643 for
a cashier's check to mail to the ABC Board, as they require. On the way back to the cafe from the bank, all
three envelopes going to Raleigh were mailed at the Post Office.

8. Petitioner mailed check #4646 to Respondent on April 23. 1992, at the address on Exhibit
C within the renewal period.

9. The ABC Board issued Petitioner's Liquor License and it was returned to the Petitioner by
April 30, 1992. The NC Department of Revenue also issued Petitioner's Beer and Wine License on April
30th.

10. Petitioner's bank statement dated 4/30/92 (Petitioner's Exhibit B) shows that check number
4643 (the ABC Board) cleared the bank on 4/24. Check number 4645 (NC Dept. of Revenue) cleared
Petitioner's bank on 4/30/92. All of this was completed prior to the May date given as the late date for the
DEHNR fee. Check number 4646 to DEHNR is still outstanding. A copy of the check stub and half of the
statement with notations of payment are contained on Exhibit C. Exhibit C a handwritten notation of the
"Date Paid: 4/23/92" and "Check Number: 4646" as well as the handwritten notation on check stub #004646
"DEHNR Food & Lodging Fees Unit 25."

11. Pursuant to G.S. 130A-248(d), Respondent billed Petitioner Gourmet Cafe, Inc., a duly
permitted facility, on March 25, 1992 for the statutory annual food and lodging fee of $25.00 for the fiscal
year ending June 30, 1992. The Respondent did not receive check #4646 within the statutory 45 day payment
period. A second invoice was mailed on May 9, 1992, for the statutory annual fee of $25.00, plus the
additional $25.00 late payment fee authorized by the statute.

12. Notice of Intent to Suspend was issued and mailed by certified mail to Petitioner on June 5,
1992. for failure to pay the $25.00 annual fee and the $25.00 late payment fee. (Exhibit D)

13. On August 18, 1992, Respondent's Agent, Ms. Elizabeth Fuller called the ABC Commission
to determine if a check for the Food and Lodging fee had been inadvertently forwarded to that agency with
the checks for Petitioner's ABC fees. The ABC Commission did not have the check for the Food and Lodging
fee and stated that the ABC Commission could not deposit a check made out to another agency.

14. The Respondent bills 21,296 facilities for the Food and Lodging fee. In Fiscal year 1991-92,
2,140 of those facilities have been required to pay a late fee of $25.00. Approximately five percent, or
approximately 107 facilities, have claimed that the money for the Food and Lodging fee had been mailed prior
to the deadline for the late fee. All of these facilities have been required to pay the late fee.

15. Petitioner's tender of a replacement check for $25.00 was not accepted by Respondent to
replace the lost $25.00 annual renewal check.

Based upon the foregoing Stipulations and Findings of Fact, the undersigned makes the following:

CONCLUSIONS OF LAW

1 . The Office of Administrative Hearings has jurisdiction over the person and subject matter of
this contested case pursuant to Chapters 130A and 150B of the North Carolina General Statutes.

2. Petitioner's business record indicates that check #4646 was written to Respondent Department,
on April 23, 1992. in the amount of $25.00. (Exhibit A)

3. Inasmuch as there is credible evidence that the check was written, as evidenced by Exhibit

2528 7:22 NORTH CAROLINA REGISTER February 15, 1993

CONTESTED CASE DECISIONS

A. it makes the Petitioner's (stipulated) statement credible that the check was hand delivered to the postal
authorities, properly addressed, and mailed to Respondent on or about April 23, 1992.

4. Petitioner's Exhibit B, (the First Citizen's Bank Statement), indicates a missing item between
check #4645 and #4647, adding further credence to the assertion that the Petitioner's check was written and
mailed at the same time checks #4645 and #4647 were written, but check #4646 was lost after delivery.

5. The posting of a letter creates a presumption that the postal service will deliver the letter to
the addressee in due course. By analogy to contract law under the traditional "mailbox rule", an acceptance
of an offer is sufficient to create a contract at the moment the acceptance letter is mailed by the offeree. This
continues to be a valid acceptance even in the absence of the actual receipt of the acceptance by the offeror.

6. The question of delivery is placed in controversy by the fact that Respondent's evidence
indicates that the check was not actually received. However, Respondent's evidence is not sufficient to
overcome the presumption of delivery to Respondent in light of Petitioner's evidence that the check was
personally delivered to the post office. Once delivery to the post office is established, by the greater weight
of the evidence, the risk of loss or misdelivery falls upon the Respondent. (Again, under general principles
of contract law, the risk of loss falls on the offeror because the offeror may stipulate the conditions for the
delivery of the acceptance.)

7. The question as to whether or not check #4646 was written and mailed is one of fact and not
law. The signal facts which indicate that the check was written and delivered into the care and custody of the
postal service are: a business journal entry indicating check #4646 was issued in sequence with other checks
written for similar purposes with these other checks being actually received by the designated payees;
Petitioner's bank statement showing that check #4646 was missing and not returned to First Citizen's Bank
in due course; Petitioner's handwritten record demonstrating that check #4646 was written to Respondent on
April 23, 1992; Petitioner's "check stub" indicating a $25.00 payment to Respondent; and Petitioner's
(stipulated) statement that she wrote and mailed check #4646 to Respondent.

8. Petitioner's assertion of writing and mailing the check, uncorroborated by independent
evidence, would be insufficient to establish an irrebuttable presumption of delivery. However, the coupling
of Petitioner's assertion of mailing with the other corroborating evidence cited above is persuasive, credible
and sufficient to overcome Respondent's evidence of a lack of mailing created merely by lack of receipt.

9. For purposes of G.S. 130A-248(d), payment of the annual renewal fee was made on April
23, 1992. Respondent's Form, Exhibit C, shows the date " paid" , (emphasis added) This is evidence of
payment intended by Respondent to be retained by the Petitioner. Since the Petitioner cannot know the date
the renewal check is received, the date of payment is presumed to be the date payment is tendered to the
postal service. Respondent's own form lends credence to this interpretation of "payment."

10. Respondent's policy of uniformly charging a late fee in all situations of lack of receipt is
ordinarily sufficient, and Respondent is entitled to continue to rely on this general presumption except in light
of individual facts and circumstances which negate the presumption of lack of mailing from lack of receipt.

11. As is the case by analogy to contract law, the offeror may stipulate the authorized means of
acceptance and receipt. Likewise, Respondent, by rule, may specify that the annual renewal must be actually
received and that the risk of loss is on the sender. 1

'Many professional and occupational licensing boards have provided by rule that payment is not
deemed to have been made until the actual receipt of the annual renewal (and other fees) by the agency (See
Title 21 of the North Carolina Administrative Code).

7:22 NORTH CAROLINA REGISTER February 15, 1993 2529

CONTESTED CASE DECISIONS

12. Respondent is not entitled to revoke Petitioner's Food and Lodging permit for failure to pay

the annual renewal or to charge Petitioner a $25.00 late renewal fee.

Based upon the foregoing Stipulations. Findings of Fact and Conclusions of Law. the undersigned
makes the following:

RECOMMENDED DECISION

That the Respondent issue to Petitioner its Food and Lodging permit upon Petitioner's payment of the
$25.00 annual renewal fee for 1992.

ORDER

NOTICE

The agency making the final decision in this contested case is required to give each party an
opportunity to file exceptions to this recommended decision and to present written arguments to those in the
agency who will make the final decision. G.S. 150B-36(a).

The agency is required by G.S. 150B-36(b) to serve a copy of the final decision on all parties and to
furnish a copy to the parties' attorney of record and to the Office of Administrative Hearings .

The agency that will make the final decision in this contested case is the North Carolina Department
of Environment, Health, and Natural Resources.

This the 13th day of January, 1993.

Julian Mann III

Chief Administrative Law Judge

2530 7:22 NORTH CAROLINA REGISTER February 15, 1993

CONTESTED CASE DECISIONS

STATE OF NORTH CAROLINA
COUNTY OF RICHMOND

IN THE OFFICE OF
ADMINISTRATED HEARINGS
92 OSP 0745
92 OSP 0893

RALPH STAMEY,
Petitioner,

NORTH CAROLINA DEPARTMENT OF
CORRECTION,

Respondent.

RECOMMENDED DECISION

The appeal of Ralph Stamey, an employee of the North Carolina Department of Correction, was heard
by Fred Gilbert Morrison Jr., Senior Administrative Law Judge, Office of Administrative Hearings, on
November 23-25, 1992, in High Point, North Carolina, and December 1, 1992, in Raleigh.

APPEARANCES

Edmond W. Caldwell, Jr.
Attorney at Law
Raleigh, North Carolina

Deborah L. McSwain
Associate Attorney General
LaVee H. Jackson
Assistant Attorney General
NC Department of Justice
Raleigh, North Carolina

ISSUES

FOR THE PETITIONER:

FOR THE RESPONDENT:

1. Whether the Respondent had just cause to demote Petitioner for unacceptable personal conduct.

2. Whether Petitioner was the victim of illegal racial discrimination in the disciplinary process.

OPINION OF THE ADMINISTRATIVE LAW JUDGE

Based on competent evidence admitted at the hearing, the Administrative Law Judge makes the
following:

FLNTJINGS OF FACT

1 . Petitioner Ralph Stamey has worked continuously for the Respondent North Carolina Department of

Correction since September 20, 1971. He has served at various prison units across the State as a
Correctional Officer, Lieutenant, Captain, Assistant Superintendent, Superintendent, and Associate
Warden.

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2. During his tenure, the Petitioner has not been counseled or disciplined for any job performance or
personal conduct deficiencies.

3. On April 28. 1991. the Petitioner was assigned as the Assistant Superintendent for Brown Creek
Correctional Institution (BCCI) in Anson County. Steve Boyles was designated as the Superintendent
for BCCI, a new prison built to house 400 inmates with a staff of 278.

4. Boyles and Stamey had known each other since their days as Correctional Officers at Western
Correctional Center in the early 1970s. They worked together well in forming a staff at BCCI. They
are white males.

5. In August of 1991 Petitioner and Superintendent Boyles decided that Gaye Kelly and Wanda Burr
would be hired to serve as their respective secretaries. Stamey was well pleased with Ms. Kelly and
Bovles had confidence in Ms. Burr. The women were eager to please them.

6. While at work. Gaye Kelly was very outgoing, friendly, eager to please, and appeared flirtatious to
Petitioner at times. Her personality and behavior aroused feelings of physical attraction in Petitioner.
She was always eager to go flying with him in his plane.

On December 12. 1991. Petitioner invited Ms. Kelly to go to lunch with him at a steakhouse in
Wadesboro. On the return trip to BCCI, Petitioner decided to test the waters with her concerning a
sexual relationship. He asked if she was happily married; remarked that he thought they shared a
mutual attraction for one another: stated that any advances from her would be welcomed: and offered
his affections. Ms. Kelly politely declined Petitioner's offer.

8. On December 13. 1991, Ms. Kelly rode with Petitioner to a Captains' meeting in Ansonville. Mr.
Stamey asked her whether she had thought any more about their conversation on December 12th.
Ms. Kelly indicated that she was not interested in pursuing the matter.

9. On December 16. 1991, Petitioner left a thank you card on Ms. Kelly's desk with a notation that she
was a great asset to BCCI. He had previously left a smiley face on one memo sheet and the initials
"GKRS" on another with notation "In alphabetical order."

10. Following their conversation on December 13th. Petitioner reflected upon the matter and decided he
wanted to be sure their working relationship was not damaged. A day or so later, around 7:30 p.m..
he called Ms. Kelly at home to tell her he had thought about his prior comments and wanted to be
sure things were okay between them. Ms. Kelly responded that everything was fine at work.
Following this phone conversation, the Petitioner made no further sexual advances or explorations
toward Ms. Gaye Kelly. Interactions between them returned to a normal working relationship.
Petitioner was extremely nice to her and went out of his way to compliment her. She continued to
sit with him at official meetings, accepted a Christmas gift from him. and gave him a ride late one
evening in January. 1992. to pick up his car at a garage several miles from BCCI.

11. In a performance review on Friday. February 7. 1992. Mr. Stamey gave Ms. Kellv an overall
summary rating of "very good performance." He noted her extremelv pleasing personalitv and
suggested that she hide her feelings at times. Superintendent Boyles concurred in this evaluation.
Ms. Kelly signed her name without making comments in the employee's section.

12. Early in the week of February 10. 1992. Petitioner met with Mr. Boyles to convey his concerns that
Ms. Kelly and Captain Christopher Brown of the staff appeared to be developing much more than a
close professional relationship. Stamey had observed Ms. Kelly sitting in a fetal position in her chair
with Brown kneeling in front of her. Ms. Kelly seemed overly friendly to Brown and brought him

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CONTESTED CASE DECISIONS

special rice krispy treats, which others also ate. They seemed to be spending too much time together.
Mr. Boyles allowed Petitioner to discuss this with them, but cautioned him not to accuse them of any
wrongdoing.

13. On February 12, 1992, in separate conferences. Petitioner shared his concerns with Gaye Kelly and
Christopher Brown. He did not accuse them of having an affair, but suggested that they modify their
behavior toward one another around the office. This angered Brown and Kelly. Stamey, Brown and
Kelly worked together without incident on February 13th.

14. On the evening of February 13, 1992, Ms. Kelly called Captain Brown at home (even though she had
thought it improper for Petitioner to call her at home in December), to discuss their respective
conferences with Petitioner and how to respond.

15. On the morning of February 14, 1992, Ms. Kelly went to Superintendent Boyles and accused
Petitioner of sexual harassment. She related Petitioner's conversations with her on December 12th
and 13th and stated her belief that Mr. Stamey was now retaliating against her for rejecting his
overtures. Mr. Boyles had her prepare a written statement outlining her allegations.

16. Following his meeting with Ms. Kelly on February 14th, Steve Boyles interviewed Captain Brown
who proceeded to accuse Petitioner of discrimination against minorities and other improper
management activities. Boyles had Brown prepare a written statement delineating his allegations.
He also spoke with his secretary, Wanda Burr, and got a statement from her corroborating Ms.
Kelly's allegations against Petitioner.

17. Superintendent Boyles informed Petitioner on February 14, 1992, that he was under investigation.
He instructed Petitioner to not interfere with this investigation. He did not interview Petitioner
concerning the allegations against him by Brown and Kelly. He did not share the statements from
Brown, Burr and Kelly with Petitioner. He did not request a response from Mr. Stamey concerning
their allegations.

18. After collecting all the statements on February 14th, Mr. Boyles prepared and presented a letter to
Petitioner informing him that he was being reassigned to new duties at the South Piedmont Area
Office, which would require two hours driving time both to and from. The letter said that Petitioner
was relieved of all duties at BCCI for the duration of an investigation relating to sexual harassment,
intimidation of staff and insubordination (with no specifics about any allegations against him). He
was instructed to report to the Area Office on February 17th at 9:00 AM at which time his new duties
would be described to him. Boyles also ordered Petitioner not to return to BCCI without the
Superintendent's expressed permission. Petitioner reported as ordered on February 17th. His new
duties were working under the Program Director by responding to letters from inmates. Other
employees performing such duties were in pay grades lower than Petitioner's.

19. Al Fullwood. a black male, was serving as an Equal Employment Opportunity Officer with the
Respondent on February 20, 1992. He was appointed to investigate the allegations made against
Petitioner. He and two others interviewed Petitioner on February 20th. For the first time, Mr.
Stamey learned that in addition to allegations of sexual harassment, he had been accused of racial
discrimination. He was evasive and denied all allegations of sexual harassment implied from verbal
questions by investigators. They had interviewed Ms. Kelly on February 19th. No documents were
shown to Petitioner about her allegations.

20. After reflecting upon his responses to questions on February 20th, Mr. Stamey called Mr. Fullwood
on February 25th to request another session that day at which he said he might well have sexually
harassed Ms. Kelly by his comments to her on December 12 and 13, 1991 . He admitted that he had

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CONTESTED CASE DECISIONS

not been completely open on February 20th due to confusion and stress.

21. Mr. Fullwood filed a report on March 12, 1992, stating that conclusive evidence substantiated the
charges of sexual harassment. In an addendum, Mr. Fullwood recommended that Respondent's
officials take the issue of Petitioner's views toward minorities into consideration when determining
what disciplinary action to impose. He had been told to investigate racial discrimination allegations
against Petitioner.

22. On March 20, 1992. Respondent issued a final written warning dated March 19th to Petitioner for
unacceptable personal conduct involving sexual harassment and providing false and/or misleading
information during an official investigation. No specifics were given in this letter. Petitioner was
further informed that a recommendation for demotion was under consideration.

23. By letter dated March 24, 1992, Respondent informed Petitioner that it was being recommended that
he be demoted from the position of Assistant Superintendent for Custody and Operations II at BCCI,
a position he had not been performing since February 17, 1992. The reasons given were "evidence
that shows you engaged in sexual harassment of an employee at BCCI and that you gave false and
misleading information during an official investigation."

24. By letter dated March 25, 1992, Respondent notified Petitioner that effective April 1, 1992, he was
demoted to the position of Correctional Officer at Harnett Correctional Institution. The reasons given
were "personal conduct violations committed by you involving sexual harassment and providing false
and/or misleading information during an official investigation." No specifics, such as names, dates,
places, words spoken, persons offended, words denied or admitted, were provided in this letter.

25. Petitioner appealed his demotion through the Respondent's internal grievance procedure.

26. Respondent's Employee Relations Committee heard Petitioner's appeal on June 4, 1992. and
concluded that unacceptable personal conduct had occurred. This conclusion was based upon the fact
that Stamey's perception concerning Brown and Kelly was unfounded and did not give cause for
suspicion. The Committee recommended that the disciplinary action be upheld because it had
determined that Petitioner had created a hostile work environment for Ms. Kelly after she rejected
his sexual advances by confronting her about her relationship with Captain Brown.

27. By letter dated June 26, 1992, Respondent informed Petitioner that the Secretary of Correction
concurred in the Committee's recommendation that his demotion be upheld, but ordered that the Final
Written Warning be expunged from his personnel record. This letter did not state the specific reasons
for the decisions by the Committee or the Secretary.

28. The Secretary of Correction had determined that demotion and final written warning are two distinct
disciplinary actions and that Petitioner's case merited one - demotion. No reasons were given for this
decision to choose demotion over final written warning.

29. Petitioner filed petitions requesting contested case hearings alleging lack of just cause for his demotion
and illegal racial discrimination against him.

30. On November 17. 1992. just prior to this hearing. Respondent sent Petitioner a revised demotion
letter which set forth in specific detail the reasons for his demotion. This letter did not mention the
Committee's hostile work environment conclusion or the Secretary's decision with his reasoning for
demotion over warning.

Based on the foregoing Findings of Fact, the Administrative Law Judge makes the following:

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CONTESTED CASE DECISIONS

CONCLUSIONS OF LAW

1. Petitioner was a permanent State employee at the time of his demotion. Because he has alleged that
Respondent lacked just cause and discriminated against him, the Office of Administrative Hearings
has jurisdiction to hear his appeal and issue a recommendation to the State Personnel Commission,
which shall make the final decision in this matter.

2. G.S. 126-35 provides, in part, "that no permanent employee subject to the State Personnel Act shall
be demoted for disciplinary reasons, except for just cause." Where just cause is an issue, the
Respondent bears the ultimate burden of persuasion. A just cause issue carries both substantive and
procedural questions. Just causes for demoting fall into two categories: (1) causes relating to
performance of duties, and (2) causes relating to personal conduct detrimental to state service -- no
prior warnings are required under (2). Also, the statute provides that "the employee shall, before the
action is taken , be furnished with a statement in writing setting forth in numerical order the specific
acts or omissions that are the reasons for the disciplinary action."

3. While Respondent had grounds to warn Petitioner, it has not met its burden of showing procedural
just cause for demoting Ralph Stamey on February 14. 1992, for unacceptable personal conduct,
because it did not comply with G.S. 126-35 in any letter until November 17, 1992, nine months later.
For all intents and purposes, Ralph Stamey was punitively demoted on February 14, 1992, without
the benefit of established rights afforded permanent State employees. Before being expelled from
his position, barred from BCCI, and ordered to drive 4 hours per day for lower duties, he was
entitled to know the specific reasons why. The Supreme Court of the United States has mandated this
as has the General Assembly. Prior to the action on February 14th, Mr. Stamey was entitled to
written notice of the charges against him, an explanation of Respondent's evidence, and an
opportunity to present his side of the story. The following investigation was also unfair and tainted
by the new issue of illegal discrimination which had never been mentioned until he faced his
inquisitors. He wasn't properly notified.

4. The Petitioner has not carried his burden of proving that he was the victim of illegal discrimination.

Based on the foregoing Findings of Fact and Conclusions of Law, the Administrative Law Judge
makes the following:

RECOMMENDED DECISION

That Petitioner's demotion be reversed and he be reinstated to his former position with back pay,
other benefits and attorney's fees, with a final written warning in his file for unacceptable personal conduct.

ORDER

It is hereby ordered that the agency serve a copy of the final decision on the Office of Administrative
Hearings. P.O. Drawer 27447, Raleigh, N.C. 2761 1-7447, in accordance with North Carolina General Statute
150B-36(b).

NOTICE

The agency is required by G.S. 150B-36(b) to serve a copy of the final decision on all parties and to

7:22 NORTH CAROLINA REGISTER February 15, 1993 2535

CONTESTED CASE DECISIONS

furnish a copy to the parties' attorney of record and to the Office of Administrative Hearings.

The agency that will make the final decision in this contested case is the State Personnel Commission.
This the 28th day of January, 1993.

Fred G. Morrison Jr.

Senior Administrative Law Judge

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CONTESTED CASE DECISIONS

STATE OF NORTH CAROLINA

IN THE OFFICE OF
ADMINISTRATIVE HEARINGS

92 INS 0747
92 INS 0825
92 INS 0880

CAROLINA MEDICORP, INC., et al
CLEVELAND MEMORIAL HOSPITAL. INC.
MOORE REGIONAL HOSPITAL, et al
Petitioners,

et al

BOARD OF TRUSTEES OF THE TEACHERS'
AND STATE EMPLOYEES' COMPREHENSrVE
MAJOR MEDICAL PLAN AND
DAVID G. DEVRIES,
Respondents.

RECOMMENDED DECISION

This matter came on for hearing before the undersigned administrative law judge on December 7 and
8, 1992, in Raleigh upon the Petitioners' and Respondents' Motions for Summary Judgment. The Petitioners
and Respondents filed Responses to the Memoranda in Support of Summary Judgment. Numerous affidavits,
admissions, answers to interrogatories, and depositions were filed by both parties. Supplemental Memoranda
were requested and oral argument was held on January 28, 1993.

The Petitioners' first argument in support of their Motion for Summary Judgment is that the
Respondents, by deciding to impose a flat discount on every hospital, failed to comply with G.S. 135-40.4.

That statute, enacted in 1985, states that the Respondents "may begin the process of negotiating
prospective rates of charges that are to be allowed under the Plan with preferred providers of institutional and
professional medical care and services." The Respondents, "under the provisions of G.S. 135-39. 5( 12). (shall)
pursue such preferred provider contracts on a timely basis and shall make monthly reports . . . ." G.S. 135-
39.5(12) authorizes the Respondents to determine basis of payments to health care providers, including
payments in accordance with G.S. 58-50-55.

G.S. 58-50-55 was enacted in 1985 to authorize insurance companies to enter into preferred provider
contracts. Subsection (d) restricts the percentage of the reduction of payments to providers not participating
in a plan. This provision concerning payments was the only part of G.S. 58-50-55 that was incorporated into
the Comprehensive Major Medical Plan. However, since G.S. 135-40.4 and 58-50-55, as well as 58-50-50,
were enacted in the same year, the definition of "preferred provider" contained in the last statute is helpful
to understanding the same term as it is used in the first statute.

G.S. 58-50-50 defines "preferred provider" in part to mean "a person, who has contracted for, or a
provider of health care services who has agreed to accept special reimbursement or other terms for health care
services from any person."

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The Respondents undertook to establish in 1991 a network of preferred providers to reduce the cost
of health care for the current biennium. The Respondents had hoped to utilize the Blue Cross Blue Shield
preferred provider network with sixty of the hospitals in the State. However, the other fifty-seven hospitals
objected and the Respondents decided to obtain flat 5% and 8% discounts from all hospitals. All 117
hospitals, including Petitioners, contracted with the Respondents to accept special reimbursement.

The Respondents announced their intentions and held informational meetings. The Respondents added
an Option 2 to their proposal but otherwise did not modify the proposal. The Petitioners first contend that
the Respondents did not engage in "a process of negotiating." The Respondents, due to the size of the Plan,
were able to convince all 117 hospitals to participate. The Petitioners question whether the Respondents
obtained "prospective rates of charges." The discounts obtained did reduce the individual hospital's rates and
the reduction was prospective. The Petitioners contend that the Respondents' agreement with all the hospitals
negates any of them from being preferred providers. However, the definition in G.S. 58-50-50 only requires
an agreement on "special reimbursement or other terms." Exclusivity is not required. Whether the
Respondents could have incorporated additional terms into their contracts with the preferred providers is not
relevant since what the Respondents included complied with the language of G.S. 135-40.4 and the language
of G.S. 135-40.4 does not mandate the additional terms.

Finally, the Respondents also complied with G.S. 1 35-39. 4A which requires that any contract
negotiations with a preferred provider "be done only after consultation with the Committee on Employee
Hospital and Medical Benefits." On May 8, 1992, prior to the execution of the contracts, the Respondents
notified the Committee by certified mail of the provisions of the proposed contracts. Notification of and
opportunity to respond by the Committee satisfied the consultation requirement of the statute.

II.

The Petitioners' second argument is that the Respondents, in signing contracts with 1 17 hospitals, did
not comply with Chapter 143. Article 3, entitled "Purchases and Contracts."

G.S. 143-49(3) authorizes the Secretary of Administration to "purchase or to contract for, by sealed,
competitive bidding or other suitable means, all contractual services and needs of State government."
Alternatively, the Secretary may "authorize any department, institution or agency to purchase or contract for
such services." Therefore, the Secretary or an authorized department may purchase or contract for contractual
services and other needs by (i) sealed, competitive bidding or (ii) other suitable means.

One of the "other suitable means," as provided in the second paragraph of G.S. 143-49(3). is an
award of any contract for contractual services exceeding $ 100.000 where negotiation is required. The last
sentence of the paragraph specifically provides that negotiation is an alternative to the competitive bidding
process. G.S. 135-40.4 explicitly requires negotiation. Respondents argue, however, that the contracts with
the 117 hospitals did not involve "contractual services."

"Contractual services" is defined as "work performed by an independent contractor requiring special
knowledge, experience, expertise or similar capabilities." The term does not include contracts primarily for
the acquisition or rental of equipment, materials and supplies. The contracts between the Comprehensive
Major Medical Plan and each of the 117 hospitals state that "(t)he Hospital will act as an independent
contractor" and "(t)he Hospital agrees to accept as reimbursement for services provided to Plan members an
additional discount" or "reimbursement on a per case basis." The "work" performed by the hospitals,
including maternity cases, psychiatric cases, open heart surgery cases and neurosurgery cases, does require
"special knowledge, experience, expertise or similar capabilities."

Respondents argue that the 1 17 contracts are not "contractual services" under the statute because Plan
members select the hospitals and services are provided to plan members. First, the Respondents contracted

2538 7:22 NORTH CAROLINA REGISTER February 15, 1993

CONTESTED CASE DECISIONS

with and selected the hospitals. Second, the Respondents compel Plan members to utilize the hospitals by
penalizing members with an additional "twenty percent (20%) coinsurance rate up to five thousand dollars
($5,000) per fiscal year per covered individual." See G.S. 135-40. 8(d). Third, it is the "State of North
Carolina (that) undertakes to make available (the Plan) exclusively for the benefit of its employees, retired
employees and certain of their dependents which will pay benefits in accordance with the terms hereof." This
language may have supported Respondents' argument that Plan members select the hospitals and services
which are provided to the members if it was not for the implementation of the network of preferred providers
under G.S. 135-40.4. The Respondents shifted from only paying benefits (i.e. reimbursing providers) to also
establishing a network of preferred providers (i.e. contracting with preferred providers). G.S. 135-40.4
authorized this shift; however, the shift resulted in 117 contracts for contractual services under G.S. 143-
49(3).

The procedure for sealed, competitive bidding is set forth in G.S. 143-52. The procedure for
contractual services and further definition of contractual services are set forth in 1 NCAC 5D .0300 through
.0500. See G.S. 143-53(3) and (5). There are no "other suitable means" provided for in the statutes or rules
which are applicable to this contested case. Therefore, the Respondents were required to utilize one of the
two alternatives in contracting with the 1 17 hospitals.

1 NCAC 5D .0302 contains nine exemptions from the procedures for service contracts. Only the
seventh and ninth ones are arguably applicable to this case. The seventh exemption is for "personal services
provided by a professional individual on a temporary or occasional basis." Given the size and scope of the
117 contracts, these contracts are neither temporary or occasional. Furthermore, the use of the word
"individual" and the illustrations given suggest that a hospital or 117 hospitals are not covered by this
exemption.

The ninth exemption is "any other service designated to be exempt by the State Purchasing Officer,
or his authorized representative." The Respondents rely upon this exemption. The State Purchasing Officer
wrote the Respondents on May 13, 1992:

Per your request, we have reviewed the materials which you have submitted to us regarding
Preferred Provider contracts.

It is our opinion that these contracts do not constitute "contractual services" as defined in
Article 3 of Chapter 143 of the General Statutes of North Carolina and the rules adopted
pursuant thereto. Therefore, pursuant to the provisions of 1 NCAC 5D .0302(9), these
contracts are hereby declared to be exempt.

As discussed above, the 117 contracts are service contracts under G.S. 143-49(3) and are not
exempted by 1 NCAC 5D .0302(1 )-(8). The last exemption applies to "any other service designated to be
exempt by the State Purchasing Officer, or his authorized representative." G.S. 143-53(3) authorizes the
Secretary of Administration to define further by rule the definition of "contractual services" in G.S. 143-49(3).
The Secretary employed this authority in 1 NCAC 5D .0302 by defining what was not covered by the term.
However, another statute, G.S. 150B-19(6), states:

An agency may not adopt a rule that does one or more of the following:

(6) Allows the agency to waive or modify a requirement set in a rule unless a rule
establishes specific guidelines the agency must follow in determining whether to waive or
modify the rule.

The State Purchasing Officer in his May 15, 1992, memorandum modified the exemptions contained
in 1 NCAC 5D .0302 by adding another exemption. The Rule authorizing the exemption, i.e. subdivision

7:22 NORTH CAROLINA REGISTER February 15, 1993 2539

CONTESTED CASE DECISIONS

(9) of .0302, contains no specific guidelines which the agency must follow in designating additional
exemptions. The rule is invalid under G.S. 150B-19(6). Therefore, the reliance by the Respondents on the
State Purchasing Officer's declaration of May 13. 1992. resulted in the Respondents failure to act as required
by law in that the Respondents failed to contract with the 117 hospitals as required by G.S. 143-49(3) and 1
NCAC 5D .0300 - .0500 where the amount of the contracts exceeded $100,000.

Since the Respondents contracted for services contrary to Article 3 of G.S. Chapter 143, the contracts
entered by the Respondents with the 1 17 hospitals may be declared void and of no effect in the proper case.
See G.S. 143-58.

The Respondents did not violate G.S. 143-59 by failing to "give preference as far as may be
practicable to" North Carolina services. In truth, the Respondents contracted only with North Carolina
hospitals because North Carolina is where most State employees, retired employees and their dependents
reside. Not contracting with an out-of-state hospital is not failing to give a preference to North Carolina
hospitals under the meaning of the statute.

III.

The Petitioners' third argument is that the Respondents failed to adopt the flat discount requirement
as a rule under Article 2A of G.S. Chapter 150B. G.S. 150B-2(8a) defines a rule to be "any agencv
regulation, standard or statement of general applicability that implements or interprets an enactment of the
General Assembly ... or that describes the procedure or practice requirements of an agency." A statute
(G.S. Chapter 135) did authorize the Respondents to negotiate the contracts and another statute (G.S. Chapter
143) did establish procedural requirements concerning negotiating the contracts. However, the contracts which
the Respondents negotiated with the 117 hospitals did not implement or interpret a statute. Similarly, the
contracts did not describe the procedures or practices of the Respondents. Rather, the contracts were merely
the means by which to purchase services. Therefore, the flat discount requirements do not constitute a rule
under Article 2A of G.S. Chapter 150B.

IV.

The Respondents' first argument in support of their Motion for Summary Judgment is that the
Petitioners (other than Elizabeth Matheson-Smith. Reba J. Smith and Dina L. Braddy) are estopped from
denying the validity of the contracts which they signed and from which they are currently receiving benefits.
The contracts which the Petitioners signed contained no provisions reserving the Petitioners the right to contest
the flat discounts provisions. Rather. Paragraph #9 thereof provides that "(t)his Agreement . . . represent(s)
the entire Agreement between the parties and supersede(s) all prior oral or written statements or agreements."
Nothing in the deposition of David G. DeVries is to the contrary.

In Capital Outdoor Advertising. Inc. v. Harper . 7 NC App 501. 172 SE 2d 793. 795 (1970). the
Court stated:

There have been few cases decided which involve the issue raised by the appellant; however,
it is settled law in North Carolina that a party will not be allowed to accept benefits which
arise from certain terms of a contract and at the same time deny the effect of other terms of
the same agreement.

The Petitioners argue that estoppel by benefit does not apply to void contracts. However, in Brooks
v. Hackney . 329 NC 166. 404 SE 2d 854 (1991), the Court applied estoppel by benefit to a deed that was
void for indefiniteness. The Court quoted Harper . The plaintiffs made payments on the land and the
defendants were precluded from selling or renting the property. The defendants relied upon the deed and the
plaintiff was estopped to deny the validity of the agreement.

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CONTESTED CASE DECISIONS

The Petitioners respond that the Respondents have not relied upon the representations or conduct of
the Petitioners. State Highway Commission y^ Thornton , 271 NC 227, 156 SE 2d 248 (1967) is cited. That
case was discussing equitable estoppel whose focus is reliance by the party asserting the defense on
representation or conduct of the other party. Estoppel by benefit focuses upon the benefit received by the
party against whom it is asserted. Estoppel by benefit is applicable to this case. Petitioner received a benefit,
i.e. participation in the Plan's network of preferred providers. As in Brooks v^ Hackney , supra , the
Respondents relied upon the validity of the contract.

In its Supplemental Authority on Summary Judgment Issue, the Petitioners cite a line of cases where
the governmental entity is not estopped from attacking the validity of a contract. Those cases have held that
public policy dictates that the governmental entity is bound by the law and therefore the agency can challenge
the ultra vires actions of its officials. In this case, private parties are challenging a contract under which they
benefited. The governmental entity is defending, not challenging, the validity of its actions. The public
policy concerns found in Petitioners' line of cases are absent here where the agency contends that its actions
were proper. Therefore, estoppel by benefit applies against the Petitioners (other than Elizabeth Matheson-
Smith, Reba J. Smith and Dina L. Braddy). Finally, the cases applying former G.S. 52-6 are suj generis and
are not controlling.

The question becomes whether the rights of Petitioners Elizabeth Matheson-Smith, Reba J. Smith and
Dina L. Braddy have been substantially prejudiced by the actions of the Respondents as alleged in the
Petitions. The allegations concern loss of freedom of choice of hospitals, financial coercion, higher
copayments for some services, finding new physicians, and lack of adequate notice of the new penalties. In
other words, do the allegations show that these Petitioners either directly or indirectly have been substantially
affected in their person or property? See G.S. 150B-23(a) and definition of "Person aggrieved" in G.S. 150B-
2(6).

As recognized in Goss v^ Lopez , 419 US 565, 572-573 (1975). "(p)rotected interests in property are
normally not created by the Constitution. Rather, they are created and their dimensions are defined by an
independent source such as state statutes or rules entitling the citizen to certain benefits." These Petitioners
contend that they have been harmed by the Respondents' failure to minimize cost and the resulting reduction
in benefits. The undersigned concluded in Part I that the Respondents complied with the contested provisions
of G.S. Chapter 135. The Petitioners, in their Supplemental Memorandum, point to no independent source
in State statutes or rules providing a property right to the Petitioners in minimizing cost and avoiding reduction
in benefits. Although, as beneficiaries of the Plan, they are affected by the management of the Plan, such as
attending a different hospital, obtaining a new physician, and receiving less and less benefits every year, these
consequences are not the result of a breach of a property interest created by State statutes or rules. Therefore,
the Petitioners have not been affected in their property. It has not been argued that the Petitioners have been
affected in their person.

The Petitions did not name the individual Petitioners in their capacity as "taxpayers" and therefore
that issue is not properly presented in these cases. The individual Petitioners sued as members of the Plan.
As concluded in Part II, the Respondents did fail to comply with the provisions of Article 3 of G.S. Chapter
143. However, it has not been shown that this violation affected a property interest of these Petitioners as
members of the Plan.

The rights of Petitioners Elizabeth Matheson-Smith, Reba J. Smith and Dina L. Braddy have not been
substantially prejudiced by the actions of the Respondents as alleged in the Petitions and therefore they lack
standing to initiate these contested cases.

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CONTESTED CASE DECISIONS

VI.

The Respondents have not violated the Petitioners rights under the Due Process Clause or the Law I

of the Land Clause for the reasons stated in the Respondent's Memorandum in Support of Motion for
Summary Judgment. There also has been no unlawful delegation.

SUMMARY JUDGMENT

It is therefore recommended that summary judgment under Rule 56, Rules of Civil Procedure, be
entered in favor of the Respondents because there is no genuine issue as to any material fact and the
Respondents are entitled to entry of judgment as a matter of law.

RECOMMENDED DECISION

It is recommended that the Petitions be dismissed.

ORDER

It is hereby ORDERED that the agency serve a copy of the Final Decision on the Office of
Administrative Hearings. P.O. Drawer 27447. Raleigh. N.C. 2761 1-7447. in accordance with North Carolina
General Statutes 150B-36(b).

NOTICE

The final decision in this contested case shall be made by the Board of Trustees of the Teachers' and
State Employees' Comprehensive Major Medical Plan. Each party has the right to file exceptions to the
recommended decision and to present written arguments on the decision to this agency.

The agency is required by G.S. 150B-36(b) to serve a copy of the final decision on all parties and to
furnish a copy to the parties' attorney of record and to the Office of Administrative Hearings.

This the 29th day of January, 1993.

Robert Roosevelt Reilly Jr.
Administrative Law Judge

2542 7:22 NORTH CAROLINA REGISTER February 15, 1993

NORTH CAROLINA ADMINISTRATIVE CODE CLASSIFICATION SYSTEM

1 he North Carolina Administrative Code (NCAC) has four major subdivisions of rules. Two of these,
titles and chapters, are mandatory. The major subdivision of the NCAC is the title. Each major
department in the North Carolina executive branch of government has been assigned a title number.
Titles are further broken down into chapters which shall be numerical in order. Tlie other two,
subchapters and sections are optional subdivisions to be used by agencies when appropriate.

TITLE/MAJOR DIVISIONS OF THE NORTH CAROLINA ADMINISTRATIVE CODE
TITLE DEPARTMENT LICENSING BOARDS CHAPTER

Architecture 2

Auctioneers 4

Barber Examiners 6

Certified Public Accountant Examiners 8

Chiropractic Examiners 10

General Contractors 12

Cosmetic Art Examiners 14

Dental Examiners 16

Dietetics/Nutrition 17

Electrical Contractors 18

Electrolysis 19

Foresters 20

Geologists 21

Hearing Aid Dealers and Fitters 22

Landscape Architects 26

Landscape Contractors 28

Marital and Family Therapy 31

Medical Examiners 32

Midwifery Joint Committee 33

Mortuary Science 34

Nursing 36

Nursing Home Administrators 37

Occupational Therapists 38

Opticians 40

Optometry 42

Osteopathic Examination & Reg. (Repealed) 44

Pharmacy 46

Physical Therapy Examiners 48
Plumbing, Heating & Fire Sprinkler Contractors 50

Podiatry Examiners 52

Practicing Counselors 53

Practicing Psychologists 54

Professional Engineers & Land Surveyors 56

Real Estate Commission 58

Refrigeration Examiners 60

Sanitarian Examiners 62

Social Work 63
Speech & Language Pathologists & Audiologists 64

Veterinary Medical Board 66

Note: Title 21 contains the chapters of the various occupational licensing boards.

Administration

Agriculture

Auditor

Economic & Community Development

Correction

Council of State

Cultural Resources

Elections

Governor

Human Resources

Insurance

Justice

Labor

14A

Crime Control & Public Safety

15A

Environment, Health, and Natural

Resources

Public Education

Revenue

Secretary of State

19A

Transportation

Treasurer

*21

Occupational Licensing Boards

Administrative Procedures

Community Colleges

Independent Agencies

State Personnel

Administrative Hearings

7:22

NORTH CAROLINA REGISTER

February 15, 1993

2543

CUMULATIVE INDEX

Pases

CUMULATIVE INDEX

(April 1992 - March 1993)

Issue

(

1 - 105 1 - April

106 - 173 2 April

174 - 331 3 - May

332 - 400 4 - May

401 - 490 5 - June

491 - 625 6 - June

626 - 790 7 July

791 - 902 8 July

903 - 965 9 - August

966 - 1086 10 August

1087 - 1 154 11 September

1155 - 1253 12 September

1254-1350 13 October

1351 - 1463 14 - October

1464 - 1640 15 November

1641 - 1720 16 - November

1721 - 1828 17 December

1829 - 2059 18 December

2060 - 2215 19 January

2216 - 2381 20 - January

2382 - 2484 21 February

2485 - 2546 22 - February

ADMINISTRATION

Administration's Minimum Criteria. 2396

Auxiliary Services. 4

Environmental Policy Act. 2385

Low-Level Radioactive Waste Management Authority,

Motor Fleet Management Division. 794

>39]

AGRICULTURE

Gasoline and Oil Inspection Board. 336

Markets Division. 2495

Pesticide Board. 1276

Plant Industry. 904. 2219. 2490

Standards Division, 2490

Structural Pest Control Committee. 332

Veterinary Division. 342

CONLMERCE

Cemetery Commission, 2398

COMMUNITY COLLEGES

Community Colleges, 1535
General Provisions. 1531
Miscellaneous Programs. 1598

CULTURAL RESOURCES

Archives and History. 2224
U.S.S. Battleship Commission. 91

2544

7:22

NORTH CAROLINA REGISTER

February 15, 1993

CUMULATIVE INDEX

ECONOMIC AND COMMUNITY DEVELOPMENT

Banking Commission, 629, 1467
Community Assistance, 909, 968
Departmental Rules, 801
Savings Institutions Division, 1833

ENVIRONMENT, HEALTH, AND NATURAL RESOURCES

Adult Health, 1199

Coastal Management, 211, 655, 1098, 1507

Departmental Rules, 826, 1852

Environmental Health, 223, 2439

Environmental Management, 190, 416, 500, 644. 830, 1013, 1487, 1856, 2086, 2308, 2438

Governor's Waste Management Board, 564, 920, 1197

Health: Epidemiology, 140, 1212

Health: Personal Health, 1217

Health Services, 52, 659, 1174, 1736, 1985, 2141

Marine Fisheries, 530

NPDES Permits Notices, 1, 107

Radiation Protection, 136, 1520, 1863, 2087

Sedimentation Control, 920

Vital Records, 565

Wildlife Resources Commission, 28, 133, 408, 449, 551, 921, 1299, 1414, 1658, 1736

Wildlife Resources Commission Proclamation, 176, 2082

FINAL DECISION LETTERS

Voting Rights Act, 106, 174, 406, 493, 628, 793, 966, 1090, 1275, 1465, 1644, 1721, 2384

GENERAL STATUTES

Chapter 150B, 1254, 2060

GOVERNOR/LT. GOVERNOR

Executive Orders, 401, 491, 626, 791, 903, 1087, 1155, 1351, 1464, 1641, 1829, 2081, 2216, 2382, 2485

HUMAN RESOURCES

Aging, Division of, 121, 346

Day Care Rules, 123

Departmental Rules, 2496

Economic Opportunity, 5

Facility Services, 111, 177, 496, 634, 980, 1352, 1647, 2404

Medical Assistance, 4, 415, 496, 816, 989, 1156, 1295, 1391, 1649, 1723, 1842, 2083, 2228

Mental Health, Developmental Disabilities and Substance Abuse Services, 111, 297, 409, 809, 1092, 1276,

2225
Social Services Commission, 183, 911, 1471, 2419

INDEPENDENT AGENCIES

Housing Finance Agency, 450, 576, 928, 1219
Safety and Health Review Board, 2190

INSURANCE

Actuarial Services Division, 1411, 2498

Admission Requirements, 2304

Agent Services Division, 1410

Consumer Services Division, 125. 1157, 2239

Departmental Rules, 7, 1095, 1405

Engineering and Building Codes, 19, 643

7:22 NORTH CAROLINA REGISTER February 15, 1993 2545

CUMULATIVE INDEX

Financial Evaluation Division, 1162. 1849, 2242

Fire and Rescue Services Division, 17, 1406

Hearings Division, 124, 1096

Life and Health Division, 22, 347, 1 167, 2300

Market Conduct Division, 1850

Medical Database Commission, 1650

Property and Casualty Division, 20, 1848

Seniors' Health Insurance Information Program. 132

JUSTICE

Alarm Systems Licensing Board. 27. 189. 643. 919. 1414. 1486, 1732

Criminal Information, 1097

General Statutes Commission. 353

Private Protective Services, 918, 1731

Sheriffs Education and Training, 990

State Bureau of Investigation, 188, 499, 1413

LICENSING BOARDS

Architecture. 1111

Certified Public Accountant Examiners. 355

Chiropractic Examiners. 1416

Cosmetic Art Examiners. 360. 922, 1669. 2331. 2500

Dietetics/Nutrition, 923

Electrical Contractors. 1785. 2332

Electrolysis Examiners. 69. 700. 2502

Geologists. 1792

Medical Examiners. 1304. 1417. 1987. 2441

Mortuary Science. Board of. 2184

Nursing." Board of. 232. 700. 1528. 2506

Opticians. 1793

Optometry, 2338

Pharmacy, Board of. 1418

Professional Engineers and Land Surveyors. 566

Speech and Language and Pathologists and Audiologists, 705

LIST OF RULES CODIFIED

List of Rules Codified. 72. 362. 452. 584. 1671. 2352. 2508

PUBLIC EDUCATION

Departmental Rules, 1108

Elementary and Secondary. 852, 1 108.

1666

REVENUE

License and Excise Tax. 712
Motor Fuels Tax, 361

STATE PERSONNEL

Office of State Personnel, 237, 705, 1113. 1419. 2005

TAX REVIEW BOARD

Orders of Tax Review. 494

TRANSPORTATION

Highways. Division of. 228. 856. 1062.
Motor Vehicles. Division of, 68. 142

1110. 1669. 1781

2546

7:22

NORTH CAROLINA REGISTER

February 15, 1993

NORTH CAROLINA ADMINISTRATIVE CODE

The full publication consists of 53 volumes, totaling in excess of 15,000 pages. It is supplemented monthly
with replacement pages. A one year subscription to the full publication including supplements can be
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